You Believe That You Can Earn 2% More on Your

question 83

Multiple Choice

You believe that you can earn 2% more on your portfolio if you engage in full time stock research.However,the additional trading costs and tax liability from active management will cost you about 0.5%.You have a $800,000 stock portfolio.What is the most you can afford to spend on your research?

• A) $4,000
• B) $8,000
• C) $12,000
• D) $16,000

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Definitions:

NPV

Net Present Value (NPV) is a financial metric that calculates the difference between the present value of cash inflows and outflows of a project or investment over time.

Capital-Labor Ratio

The ratio of the total value of capital equipment to the labor force, indicating the level of capital intensity in production processes.

Productivity Growth

The increase in the efficiency of production in an economy, typically measured as the output per hour worked.

Cumulative Power

Cumulative power refers to the total amount of energy generated or exerted over a period of time.