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There are three stocks: A, B, and C. You can either invest in these stocks or short sell them. There are three possible states of

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There are three stocks: A, B, and C. You can either invest in these stocks or short sell them. There are three possible states of nature for economic growth in the upcoming year (each equally likely to occur); economic growth may be strong, moderate, or weak. The returns for the upcoming year on stocks A, B, and C for each of these states of nature are given below: State of Nature Moderate Stock Strong Growth Growth 39% 17% 30% 15% 6% 14% Weak Growth -5% 0% 22% If you wanted to take advantage of a risk-free arbitrage opportunity, you should take a short position in - - and a long position in an equally-weighted portfolio of - Multiple Choice 0 O C; A and B O B; A and C B; A 0 A, B and C 0 A and B; C

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