Consider the following two, completely separate economies. The expected return and volatility of all stocks in both economies are the same.
In the first economy, all stocks move together in good times all prices rise together and in bad times, they all fall together.
In the second economy, stock returns are independent-one stock increasing in price has no effect on the prices of other stocks.
Which economy would you choose to invest in?
Explain your rationale for your choice.
Discussion Instructions:
Discussion posts should be answered with Fundamental Financial merits along with your experiences and opinions. Please share your experiences and opinions-we will all benefit if you do! Thank you.
The primary thread must have a minimum of 200 words. Your Secondary posts must have a minimum of 100 words.
Please put your name into the subject line.
Provide References.
Please post your initial response on or before Thursday at 23:59 EST. Provide comments on 1 of your classmates’ posts on or before Sunday at 23:59 EST.
If you have any questions, please review the instructions for the discussion board as outlined in the syllabus.
