Carlos Holds a Portfolio of Stocks and Bonds

question 13

Multiple Choice

Carlos holds a portfolio of stocks and bonds. He is planning to buy a real estate property worth $150,000. He can use financial leverage to make this purchase by:

• A) paying $75,000 cash in the first installment and selling shares worth $75,000 from his portfolio to pay the second installment.
• B) taking a personal loan worth $100,000 and selling bonds worth $50,000 from his portfolio.
• C) selling bonds from his portfolio worth $80,000 and writing a check for $70,000.
• D) selling stocks from his portfolio worth $50,000 and paying $100,000 in cash.
• E) paying $150,000 in cash from his savings account.

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Definitions:

Monopolistic Competition

A market structure characterized by many firms selling products that are similar but not identical, leading to competition based on factors other than price.

Perfect Competition

A market structure where many firms sell identical products, no single firm can influence the market price, and all information is fully shared among buyers and sellers.

Number of Firms

The total count of businesses operating within a particular market or industry.

Perfect Price Discrimination

A pricing strategy where a seller charges each buyer the maximum price the buyer is willing to pay.