What Is the Variance of the Returns on a Security

question 7

Multiple Choice

What is the variance of the returns on a security given the following information?
$\begin{array}{lrr}\text { state of the Economy}&\text { Probabllity}&\text { Rate of}\\&\text {of State of Economy}&\text {Return if}\\&&\text {State Occurs}\\\text { Boom } & .20 & 16 \% \\\text { Normal } & .50 & 8 \% \\\text { Recession } & .30 & -8 \%\end{array}$

• A)79.36%
• B)83.35%
• C)87.73%
• D)89.23%
• E)90.98%

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