Meb Owns Stock in Two Similar, Large, fiNancially Sound Corporations

question 19

Multiple Choice

Meb owns stock in two similar, large, financially sound corporations. Company A consistently earns rates of return of 12 percent per year, while company B regularly generates rates of return of 8
Percent per year. If Meb is attempting to arbitrage, he will

• A) sell his stock in company B and buy more stock in company A.
• B) sell his stock in company A and buy more stock in company B.
• C) keep his portfolio balanced with an equal or nearly equal number of shares of each stock.
• D) buy stock in other companies in an effort to diversify and minimize risk.

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Definitions:

Edward Titchener

A psychologist who founded structuralism, an early school of psychology, and introduced the method of introspection.

Structuralism

An approach in various academic disciplines that explores the relationships between fundamental elements of some kind, assuming that the complex phenomena under investigation can be understood by analyzing these elements.

Humanistic Psychology

A psychological perspective which emphasizes individual potential and stress the importance of growth and self-actualization.

The Animal Mind

An area of study focused on understanding the cognitive processes and mental states of non-human animals, including perceptions, emotions, and problem-solving abilities.