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Question
Suppose all possible investment opportunities in the world are limited to the four stocks list in the table below:| Stock | Price per Share | Number of Shares Outstanding (Millions) |
| Taggart Transcontinental | $15.60 | 25 |
| Rearden Metal | $13.00 | 45 |
| Wyatt Oil | $29.25 | 10 |
| Nielson Motors | $26.25 | 26 |
Suppose that you have invested $100,000 invested in the market portfolio and that the stock price of Taggart Transcontinental suddenly drops to $7.80 per share. Which of the following trades would you need to make in order to maintain your investment in the market portfolio:
1. Buy approximately 1,140 shares of Taggart Transcontinental
2. Sell approximately 256 shares of Rearden Metal
3. Sell approximately 57 shares of Wyatt Oil
4. Sell approximately 148 shares of Nielson Motors
A) 1 only
B) 2 only
C) 2, 3, and 4 only
D) 1, 2, 3, and 4
E) None of the above
Answer
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Related questions
Q:
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2
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5 Investment
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120
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Q:
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4
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