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The rate of return on the common stock of a company is expected to be 15.50% in a boom economy, 10.50% in a normal economy,
The rate of return on the common stock of a company is expected to be 15.50% in a boom economy, 10.50% in a normal economy, and only 5.00% in a recessionary economy. The probabilities of these economic states are 38.0% for a boom, 34.0% for a normal economy, and 28.0% for a recession. What is the variance of the returns on the common stock of the company?
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