The rate of return on the common stock of a firm is expected to be 14% in a boom economy, 8% in a normal economy, and only 2% in a recessionary economy. The probabilities of these economic states are 20% for a boom, 70% for a normal economy, and 10% for a recession. What is the variance of the returns on the common stock of the firm?

Select one:

a.

0.002471

b.

0.001863

c.

0.002001

d.

0.001280

e.

0.001044