If the economy booms, RTF, Inc., stock is expected to return 9 percent. If the economy goes into a recessionary period, then RTF is expected to only return 5 percent. The probability of a boom is 71 percent while the probability of a recession is 29 percent. What is the variance of the returns on RTF, Inc., stock?

.000234

.039200

.000138

.000329

.018150

A stock has a beta of 1.20 and an expected return of 11.3 percent. If the risk-free rate is 3.5 percent, what is the stock's reward-to-risk ratio?

6.00%

6.50%

5.69%

9.42%

7.96%