25.

If the economy booms, RTF, Inc. stock is expected to return 10 percent. If the economy goes into a recessionary period, then RTF is expected to only return 4 percent. The probability of a boom is 63 percent while the probability of a recession is 37 percent. What is the variance of the returns on RTF, Inc. stock?

0.000778

0.001465

0.000839

0.028138

0.000222