What Is the Variance of the Expected Returns on This

question 34

Multiple Choice

What is the variance of the expected returns on this stock?
$\begin{array}{lcr}\text { State of the Economy } & \text { Probability } & E(R) \\\text { Boom } & .25 & 15 \% \\\text { Normal } & .75 & 8 \%\end{array}$

• A)5.25
• B)5.79
• C)6.25
• D)9.19
• E)10.50

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Definitions:

Chalk Formation

A type of soft, white, porous sedimentary rock composed mainly of calcite or aragonite, formed from the skeletal remains of microorganisms.

Microscopic Organisms

Tiny life forms, often single-celled, that can only be seen with the aid of a microscope.

Limestone

A sedimentary rock composed primarily of calcite or dolomite, widely used in construction and manufacturing.

Calcium Carbonate

A naturally occurring compound found in rocks, shells, and marine organisms, used widely in the manufacturing and construction industries.