(Price additivity) Beat The Market (BTM) is an open-end mutual fund. The funds portfolio consists of 10,000...
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(Price additivity) Beat The Market (BTM) is an open-end mutual fund. The fund’s portfolio consists of 10,000 Yahoo Inc. stocks traded for $36.14 as well as 15,000 stocks of Google Inc. traded for $191.94 and 20,000 stocks of General Electric Co. traded for $33.95. There are currently 32,000 BTM shares.
a. If the price of a BTM share is $122.48, does the price additivity rule hold?
b. The following day, the price of Goggle drops by 5%, the price of General Electric drops by 2%, and the price of Yahoo remains the same. The price of BTM was $117. Does the price additivity rule hold?
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Related Book For 
Principles Of Finance Wtih Excel
ISBN: 9780190296384
3rd Edition
Authors: Simon Benninga, Tal Mofkadi
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