Question: Using the five macroeconomic factors described in the text, you outline the factor exposures of two stocks as follows: a. What would be the factor

Using the five macroeconomic factors described in the text, you outline the factor exposures of two as follows:

a. What would be the factor exposures of a portfolio invested half in stock A and half in stock B?
b. Contrary to general forecasts, you expect strong economic growth with a slight increase in inflation. Which stock should you overweigh in your portfolio?

Stock A 0.2 0.6 Stock B Factor Confidence Time horizon Inflation Business cycle Market timing 0.6 0.8 -0.5 2.0 0.7 -0.1 4.0 1.0

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