Sally Wants to Invest in Only Two Stocks

question 36

Multiple Choice

Sally wants to invest in only two stocks. Which pair of stocks should Sally select?

• A) Stocks A and B move downward at the same time.
• B) Stocks C and D move in opposite directions at the same time.
• C) Stocks E and F move upward at the same time.
• D) Stocks G and H move randomly at the same time.

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Definitions:

LIFO

The Last In, First Out approach to inventory valuation prioritizes the sale of the most recently manufactured items before older stock.

Tax Advantage

A tax advantage refers to the economic bonus that applies to certain accounts or investments that are exempt from taxation, or taxed at a lower rate.

Rising Prices

A situation where the general level of prices for goods and services increases over a period, indicative of inflation.

LIFO Liquidation

The process of reducing inventory using the Last-In, First-Out (LIFO) method, which can impact the cost of goods sold and taxes during times of inflation.