What is the variance of the returns on RTF

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Problem 1: If the economy booms, RTF, Inc., stock is expected to return 11 percent. If the economy goes into a recessionary period, then RTF is expected to only return 5 percent. The probability of a boom is 75 percent while the probability of a recession is 25 percent. What is the variance of the returns on RTF, Inc., stock?

Option 1: .025981

Option 2: .000675

Option 3: .047500

Option 4: .000506

Option 5: .000338

 

Reference no: EM132469913

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