1. The expected return on a security is currently based on a 75 percent chance of a 14 percent return given an economic boom and a 25 percent chance of a 6 percent return given a normal economy. Which of the following changes will increase the expected return on this security? I. an increase in the probability of an economic boom II. a decrease in the rate of return given a normal economy III. an increase in the probability of a normal economy IV. an increase in the rate of return given an economic boom

Select one:

a. I and II only

b. I and IV only

c. II and III only

d. I, III, and IV only

e. I, II, III, and IV