Business stage question. into, Investment, following, Business, question

yalo

Which one of the following alternatives correctly assigns the attractive
investment opportunities that typically occur within the indicated stage of
the business cycle?
Business cycle stage Investment opportunities
A. Recovery Commodities and real estate
B. Early expansion Stocks and bonds
C. Late expansion Bonds and interestsensitive stocks
D. Recession Commodities and bonds
The answer in the book is C. I assume logic is that everyone pouring money into stocks at late expansion and bonds price is depressed.
Anyway, A seems right to me as well. When the economy is recovering, it will need more resources to expand, thus higher commodities price in the future. It is not such bad time to buy houses too. Any thoughts.

bchadwick

I think recovery would be equity no? Since businesses are expanding, people are investing and so on.
In late expansion, I’m assuming your rate of growth has decreased but commodities and interest sensitive stocks bring you a decent return..
Not strong on this subject though.

Windjam

this is one of those things you have to memorize and not think abut it too much, one can argue all day about what to buy when and where. if you look at it, stocks are only “really” recommended in recession and recovery periods.

firat

C. I would choose C because at late expansion interest rates are high as the Fed will have been raising rates to control inflation. From theer on, interest rates shoudl go down, thus pushing up bond prices.
Other choices should be elaborated on by any others out there…