What Is the Variance of the Expected Returns on This

question 22

Multiple Choice

What is the variance of the expected returns on this stock?
$\begin{array}{lrr}\text { State of the Economy } & \text { Probability of } & \text { Rate of Return if } \\& \text { State of Economy } & \text { state occurs }\\\text { Boom } & .40& 15\% \\\text { Normal } & .60 &19 \%\end{array}$

• A)1.21%
• B)1.42%
• C)1.56%
• D)3.84%
• E)4.03%

---

Definitions:

Periodic Payments

Payments made or received regularly over a set period of time, often in context with loans or annuities.

DBRS

DBRS is a globally recognized credit rating agency that provides independent assessments of the creditworthiness of companies and sovereign entities.

Investment Grade

A rating that signifies a municipal or corporate bond presents a relatively low risk of default.

Highest Rating

The top tier or grade assigned by rating agencies to entities or securities, indicating the lowest risk of default.