Suppose you have $200 with which you can buy shares of stock from two companies: ABC Hot Chocolate Company and XYZ Lemonade. Each companys stock currently sells for $100 per share. If the temperature next year is lower than average, the stock price for ABC will increase by $30, and the stock price for XYZ will not change. If the temperature next year is higher than average, the stock price for XYZ will increase by $30, and the stock price for ABC will not change. There is a 20 percent chance that it will be colder than average next year, and a 60 percent chance that it will be warmer than average. If you purchase two shares of XYZ stock and no shares of ABC stock, your expected gain will be ______.

Multiple Choice

a. $36

b. $48

c. $12

d. $24