What Is the Variance of the Expected Returns on This

question 73

Multiple Choice

What is the variance of the expected returns on this stock?
$\begin{array}{lrr}\text { State of the Economy } & \text { Probability of } & \text { Rate of Return if } \\& \text { State of Economy } & \text { state occurs }\\\text { Boom } & .30& 20\% \\\text { Normal } & .70 &10 \%\end{array}$

• A)18.75%
• B)21.00%
• C)31.53%
• D)48.97%
• E)50.03%

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Definitions:

Cost of Living Adjustment

An increase in income or salary to counteract inflation, helping maintain employees' purchasing power.

Collective Agreements

Contracts made between employers and a group of employees, often represented by a union, that establish terms of employment, working conditions, and wages.

Collective Bargaining

A negotiation process between employers and a group of employees aimed at establishing agreements regarding wages, working conditions, and other employment terms.

External Factor

Influences, trends, or variables originating outside of an organization that can affect its performance and decision-making.