There Are Three Stocks: A, B, and C If You Invested in an Equally-Weighted Portfolio of Stocks B

question 50

Multiple Choice

There are three stocks: A, B, and C. You can either invest in these stocks or short sell them. There are three possible states of nature for economic growth in the upcoming year (each equally likely to occur) ; economic growth may be strong, moderate, or weak. The returns for the upcoming year on stocks A, B, and C for each of these states of nature are given below: $\begin{array}{cccc}&\text { State of Nature }&\text {Moderate }&\text { Weak }\\\text { Stock } & \text { Strong Growth } & \text { Growth } & \text { Growth } \\\text { A } & 39\% & 17 \% & -5 \% \\\text { B } & 30 \% & 15 \% & 0\% \\\text { C } &6\% &14\% &22\%\end{array}$


If you invested in an equally-weighted portfolio of stocks B and C, your portfolio return would be _____________ if economic growth was weak.

• A) ?2.5%
• B) 0.5%
• C) 3.0%
• D) 11.0%

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Definitions:

Neurotransmitters

Chemicals that transmit signals across a synapse from one neuron to another in the nervous system.

Neuron-produced Chemicals

Chemicals, such as neurotransmitters, that are produced by neurons to transmit signals across the synapse to another neuron.

All-or-none Response

A principle that states a neuron fires with the same potency each time, although frequency can vary; it either fires or doesn't.

Electrical Charge

A fundamental property of matter that is responsible for electrical phenomena, existing in a positive or negative form.