If the economy booms, RTF, Inc. stock is expected to return 12 percent. If the economy goes into a recessionary period, then RTF is expected to only return 3 percent. The probability of a boom is 62 percent while the probability of a recession is 38 percent. What is the variance of the returns on RTF, Inc. stock?

Multiple Choice

• 0.042888

• 0.000342

• 0.001908

• 0.000858

• 0.001129