Equity Performance in Economic Recovery

Medium Economic Analysis Business Cycle Analysis

After a prolonged recession characterized by rising unemployment and declining consumer confidence, the economy of Nation X shows signs of recovery. Economic indicators, such as GDP growth and manufacturing output, have started to improve, while inflation remains subdued. As a portfolio manager, you are assessing the implications of these changes for investment strategy.

Based on your analysis of the business cycle, which of the following statements best describes the potential impact on equities as the economy transitions from recession to recovery?

Equities are likely to perform poorly in the early stages of recovery due to continued high levels of unemployment.

Equities are expected to start performing well as corporate earnings begin to improve and consumer sentiment recovers.

Equities typically experience high volatility with minimal returns in the recovery phase.

Hint

Submitted12.3K

Correct10.3K

% Correct84%