Suppose you have an asset with a return that rises as GDP increases. If the government announces that GDP is unexpectedly higher than was previously thought, how will the asset's return be affected by the announcement?
A) The return will increase.
B) The return will remain unchanged.
C) The return will decrease.
D) It is undetermined and more information is needed.

Question

Quizplus · Accepted Answer

Since the asset's return rises as GDP increases, the unexpected increase in GDP will lead to an increase in the asset's return. Therefore, the correct choice is A.

Suppose You Have an Asset with a Return That Rises