1. **State the problem:** Calculate the expected returns for shares K and L given their probabilities and returns. 2. **Formula for expected return:** $$E(R) = \sum (p_i \times R_i)$$ where $p_i$ is the probability of outcome $i$ and $R_i$ is the return in outcome $i$. 3. **Calculate expected return for K:** $$E(R_K) = 0.3 \times 0.20 + 0.5 \times 0.15 + 0.2 \times 0.05$$ $$= 0.06 + 0.075 + 0.01 = 0.145 = 14.5\%$$ 4. **Calculate expected return for L:** $$E(R_L) = 0.3 \times 0.06 + 0.5 \times 0.10 + 0.2 \times 0.12$$ $$= 0.018 + 0.05 + 0.024 = 0.092 = 9.2\%$$ 5. **Interpretation:** The expected return is the weighted average of possible returns, weighted by their probabilities. **Final answer:** K 14.5% and L 9.2% which corresponds to option b.