The Rate of Return on the Common Stock of Flowers

question 69

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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