You are comparing stock A to stock B. Given the following information, which one of these two stocks should you prefer and why?

Rate of Return if

State of Probability of State Occurs__

Economy State of Economy Stock A Stock B

Boom 60% 8% 12%

Recession 40% 2% -5%

Group of answer choices

Stock A; because it has an expected return of 6.6% and appears to be less risky

Stock B; because it has an expected return of 6.2% and appears to be less risky

Stock B; because it has an expected return of 7.6% and appears to be less risky

Stock A; because it has an expected return of 5.2% and appears to be less risky

Stock A; because it has an expected return of 5.6% and appears to be less risky