If You Invested in an Equally-Weighted Portfolio of Stocks B

question 58

Multiple Choice

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

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

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Definitions:

Fluorine

A highly reactive, pale yellow gas at room temperature, being the most electronegative and reactive of all the elements.

Francium

A highly radioactive metal with the atomic symbol Fr, the least stable and most rare naturally occurring element in the periodic table.

Conduct

To transmit or facilitate the transfer of something such as electricity or heat.

Atoms

The basic units of matter composed of a nucleus surrounded by electrons, representing the smallest component of an element that retains its chemical properties.