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

question 86

Multiple Choice

Use the following information to answer the question(s) below.
Suppose the market consists only of Merck (MRK) and Boeing (BA) .Merck stock is trading for $36.70 per share with 2.11 billion shares outstanding while Boeing has 697.5 million shares outstanding and a market capitalization of $38.223 billion.Assume that you hold the market portfolio.
-Which of the following statements is FALSE?

• A)The market portfolio contains more of the smallest stocks and less of the larger stocks.
• B)For the market portfolio,the investment in each security is proportional to its market capitalization.
• C)Because the market portfolio is defined as the total supply of securities,the proportions should correspond exactly to the proportion of the total market that each security represents.
• D)Market capitalization is the total market value of the outstanding shares of a firm.

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Definitions:

Continued Losses

Persistent financial deficits experienced by a business over multiple periods, indicating an inability to generate sufficient revenue to cover expenses.

Industry

Denotes a specific group of companies or businesses that produce or sell similar products and services.

Consumer Sovereignty

The concept that consumers' preferences and decisions dictate the production and sale of goods and services in an economy.

Legislation

Laws and statutory requirements passed by a legislative body or the process involved in creating these laws.