A popular value-weighted index is constructed out of shares in the two companies, shown in the table below. On Day 1 you construct a portfolio that mimics the index with 15% invested in Company 1 and 85% invested in Company 2
On Day 2, what trades do you need to make in order to adjust your portfolio weights so that your portfolio earns the same return as the index from Day 2 to Day 3?
Company 1 Company 1 Company 2 Company 2
Day Price # of Shares Outstanding Price # of Shares Outstanding
1 6.62 400 10.00 1,500
2 7.53 400 10.54 1,500
3 8.82 400 11.07 1,500
A) Buy more of Company 1 and buy more of Company 2
B) Buy more of Company 1 and sell some of Company 2
C) Sell some of Company 1 and sell some of Company 2
D) Sell some of Company 1 and buy more of Company 2
E) Make no trades
E
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What recent events in the United States history gave rise to renewed demands for the dismantling of affirmative action policies?
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The correlation in error terms that arises when the error terms at successive points in time are related is termed _____
a. leverage b. multicorrelation c. autocorrelation d. parallel correlation
The service sector has lower productivity improvements than the manufacturing sector because
A) the service sector uses less skilled labor than manufacturing B) the quality of output is lower in services than manufacturing C) services usually are labor-intensive D) service sector productivity is hard to measure E) none of the above