Assume you think a boom and a recession are equally likely to happen, a 50-50 chance of either.

State of economy	Probability of state of economy	Security returns if state occurs
		Security L	Security U
Recession	0.50	-20%	30%
Boom	0.50	70%	10%

Notice that security U earns 30% if there is a recession and 10% if there is a boom. Based on the above information, what is expected return on security U?

Select one:

a. 10%

b. 20%

c. 25%

d. 45%