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:

Profit Maximization

A financial strategy aimed at increasing a business's surplus by reducing costs or enhancing revenue.

Ethical Behavior

Refers to actions or practices that are morally upright and adhere to widely accepted moral principles or standards.

Outcome-Based Ethics

An ethical philosophy that focuses on the impacts of a decision on society or on key stakeholders.

Standards of Behavior

Established or accepted norms of conduct that individuals are expected to follow within a society or organization.