Explanation

To calculate the variance of Equidor's stock price, we need to follow these steps:

Step 1: Calculate the Expected Value E(X)

E(X) = Σ [Probability × Share Price]

E(X) = (0.20 × 32) + (0.25 × 28) + (0.40 × 34) + (0.15 × 38) E(X) = 6.4 + 7 + 13.6 + 5.7 = 32.7

Step 2: Calculate Variance

Variance = Σ [Probability × (Share Price - E(X))²]

For each probability-price pair:

1. 20% probability, $32.00: (32 - 32.7)² = (-0.7)² = 0.49 Contribution: 0.20 × 0.49 = 0.098

2. 25% probability, $28.00: (28 - 32.7)² = (-4.7)² = 22.09 Contribution: 0.25 × 22.09 = 5.5225

3. 40% probability, $34.00: (34 - 32.7)² = (1.3)² = 1.69 Contribution: 0.40 × 1.69 = 0.676

4. 15% probability, $38.00: (38 - 32.7)² = (5.3)² = 28.09 Contribution: 0.15 × 28.09 = 4.2135

Step 3: Sum the Contributions

Variance = 0.098 + 5.5225 + 0.676 + 4.2135 = 10.51

However, there seems to be a discrepancy in the provided solution. The solution shows:

• Using E(X) = 33 (not 32.7)
• With E(X) = 33:
  • 32: (32-33)² = 1 → 0.20 × 1 = 0.20
  • 28: (28-33)² = 25 → 0.25 × 25 = 6.25
  • 34: (34-33)² = 1 → 0.40 × 1 = 0.40
  • 38: (38-33)² = 25 → 0.15 × 25 = 3.75
  • Total = 0.20 + 6.25 + 0.40 + 3.75 = 10.60

Note: The provided solution in the text incorrectly calculates E(X) as 33, but the actual calculation shows 32.7. However, since the answer choices are integers and the solution shows variance ≈ 10.60, the closest integer is 11.

Therefore, the correct answer is B (11).