A stock is expected to earn 20 percent in a boom economy, 12.00 percent in a normal economy, and lose 20 percent in a recessionary economy. There is a 15 percent chance the economy will boom and a 60 percent chance the economy will be normal. What is the expected risk premium for this stock if the risk-free rate is expected to be 3.80 percent?

.00 percent

1.11 percent

1.40 percent

.44 percent