The Rate of Return on the Common Stock of Flowers

question 12

Multiple Choice

The rate of return on the common stock of Flowers by Flo is expected to be 13 percent in a boom economy,11 percent in a normal economy,and only 6 percent in a recessionary economy.The probabilities of these economic states are 15 percent for a boom,80 percent for a normal economy,and 5 percent for a recession.What is the variance of the returns on this stock?

• A)0)000185
• B)0)001580
• C)0)001963
• D)0)000301
• E)0)000471

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Definitions:

Marketing Plans

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The funds that are available to a business for spending in the form of cash, liquid securities, and credit lines.

Impact/Likelihood Matrix

A tool used in risk management to evaluate risks based on the likelihood of their occurrence and the impact if they do occur.