You are considering purchasing stock S. This stock has an expected return of 8% if the economy booms and 3% if the economy goes into a recessionary period. The overall expected rate of return on this stock will:
A.
be equal to one-half of 8% if there is a 50% chance of an economic boom.
B.
vary inversely with the growth of the economy.
C.
increase as the probability of a recession increases.
D.
increase as the probability of a boom economy increases.