Use the Following Information to Answer the Question(s)below

question 101

Multiple Choice

Use the following information to answer the question(s) below.
Suppose all possible investment opportunities in the world are limited to the four stocks listed in the table below:
-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

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Definitions:

Significance Level

The threshold used in hypothesis testing to determine whether to reject the null hypothesis, commonly denoted as alpha (α).

Power of the Test

The probability that a statistical test will correctly reject a false null hypothesis, essentially the test's ability to detect an effect when there is one.