1. Suppose the following are the estimated rates of return on a proposed investment X, given the probability of occurrence (p) for the five possible states of the economy. Very poor economy: p = 0.2, the estimated Rate of return if this state occurs is -10%; Poor economy: p =0.2, Rate of return =0%; Average: p=0.4, Rate of return = 10%; Good: p=0.15, Rate of return=20%; and finally, Very good: p=0.05, Rate of return=25%. What is the expected rate of return on the proposed investment?

   	a.	6.25%
   	b.	7.05%
   	c.	10%
   	d.	11%