A risky stock fund currently sells for $108 a share. Its likely dividend per share and next year price depend on the state of the economy are projected as follows:

State of the economy	Probability	Price	Dividend
Boom	0.2	$128	$3
Normal	0.5	115	2
Recession	0.3	95	0

the current risk-free rate is 2%. What is the risk premium of the risky portfolio

a. 3.72%

b. 4.81%

c. 2.81%

d. 3.37%