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; 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: State of Nature Stock Strong Growth Moderate Growth Weak Growth 39% 30% 17% 1 5% 14% 0% 22% If you invested in an equally weighted portfolio of stocks A and C, your portfolio return would be if economic growth was strong.
a 17.0%
b 22.5%
c 30.0%
d 30.5%
e none of the above
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