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EpiscoWhat EpiscoWhat
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5 years ago
Suppose that you have $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 1140 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
Textbook 
Corporate Finance: The Core

Corporate Finance: The Core


Edition: 4th
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EgorGruzdevEgorGruzdev
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5 years ago
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More solutions for this book are available here
E
Explanation:  E) There is no need to rebalance your portfolio.  As an investor, you still hold the market portfolio and therefore there are no trades needed.

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EpiscoWhat Author
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I appreciate what you did here, answered it right Smiling Face with Open Mouth
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Correct Slight Smile TY
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