Which one of the following statements is correct?

Which one of the following statements is correct?

If the economy moves into a recessionary period from a normal period, all stocks will have lower expected returns.

A change in the probability of a state of the economy occurring has no impact on the expected return on a portfolio of risky assets.

Most stocks tend to have the same return regardless of the economic state.

The expected state of the economy can have a major impact on the expected return on a portfolio.

The various economic states of the economy are generally equally likely to occur in any given year.