If the economy booms, RTF, Inc. stock is expected to return 12 percent. If the economy goes into a recessionary period, then RTF is expected to only return 2 percent. The probability of a boom is 78 percent while the probability of a recession is 22 percent. What is the variance of the returns on RTF, Inc. stock?
.041425
.001338
.049000
.000961
.001716