Suppose the following information represents possible future reutnrs for ATT stock next year:
| State of Economy |
Probability of state of economy |
Rate of return if state occurs |
|
1
|
.20 |
12%
|
| 2 |
.20 |
6% |
| 3 |
.20 |
-10% |
| 4 |
.20 |
22% |
| 5 |
.20 |
5% |
|
1.00 |
|
What is the expected rate of return for ATT common stock?
What is the variance of return for ATT common stock?