Question

You have conducted your economic analysis of the US markets and determined that the US is likely to be in a contractionary phase. Which of the following stock types should you be most likely to overweight in your portfolio?

Group of answer choices

A. cyclical stocks

B. growth stocks

C. technology stocks

D. defensive stocks

Answer 1

The Correct answer is mentioned below:

Correct answer is Option "D" - Defensive stocks

Because the defensive stocks are relatively better performer in the market which is in recession and during the inflation the defensive stocks tend to perform below the market. investors are most likely to invest in the defensive stocks when the expect any recession or down turn in the market.

A.) Cyclical stocks is incorrect because the investors invest in these stocks when the economy is at the good level and these stocks are worthless when the economy is facing recession.

B.) Option is incorrect because the Growth stocks are share in the company and they are likely to grow at an above average rate and are more riskier for the investors due to the dividend is not given on these stocks , however their growth is above average but not rational for the company to deal whole there is a down turn in economy.

C.) Technology stocks is incorrect because these kind of stocks are not available in the U.s share market and this is term related to the information technology and hence it is incorrect option.