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

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%