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

b 22.5%

Explanation:

The computation of the portfolio return is shown below:

Since it is mentioned that the invested should be made on equally basis so the weightage of strong Stock A and Stock C is 50% and the same is given below:

= (Strong growth stock A returns × weightage) + (Strong growth stock C returns × weightage)

= (39% × 50%) + (6% × 50%)

= 19.50% + 3%

= 22.50%

We simply added the both Stock A and stock C so that the portfolio return could arrive

answer; ///i believe the correct answer is (350); (c) is your answer

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.