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:

Dysfunctional Resistance

Negative behaviors or attitudes that arise in opposition to change or authority, hindering progress or performance.

Self-Interested Politics

Actions and maneuvers by individuals or groups aimed at advancing their own personal agendas or interests, often at the expense of others.

Perceptions of Organizational Politics

Involves how individuals within an organization perceive the power dynamics, influence tactics, and informal networks.

Political Activities

Actions undertaken by individuals or groups to influence or engage with political processes and governance.