Question: Suppose the following information represents possible future returns for ATT stock next year: State of Economy Probability of state of economy Rate of return if

Suppose the following information represents possible future returns for ATT stock next year:

State of Economy

Probability of state of economy Rate of return if state occurs
1 0.2 12%
2 0.2 6%
3 0.2 -10%
4 0.2 22%
5 0.2 5%
1

1. What is the expected rate of return for ATT common stock?

2. What is the variance of the return for ATT common stock?

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