George Clancy wants to diversify his portfolio by adding a stock that has a value which moves in direct relation to the business cycle.What type of stock is George thinking about adding to his portfolio?

Question

Quizplus · Accepted Answer

George is interested in adding a stock that has a value which moves in direct relation to the business cycle, indicating that he is looking for a stock that is influenced by macroeconomic factors such as GDP growth, inflation, and interest rates. Cyclical stocks are known to have high sensitivity to the business cycle and tend to perform well during periods of economic expansion and underperform during economic contraction. Therefore, adding a cyclical stock to his portfolio would help George diversify his holdings and potentially benefit from economic upswings.

George Clancy Wants to Diversify His Portfolio by Adding a Stock