Problem: Using the data below, suppose you are holding a market portfolio, and have invested $12000 in stock C.
a) How much have you invested in stock A?
b) How much shares of B do you hold?
c) If the price of Stock C suddenly drops to $4 per share, what trades would you need to make to maintain a market portfolio?
Stock Price/Shares ($) Number of shares outstanding ( millions)
A 10 10
B 20 12
C 8 3
D 50 1
E 45 20