Option A is the least expensive, with a total out-of-pocket of [tex]$\$[/tex]220[tex]$.

Question 12 (Multiple Choice Worth 1 point)
(Diversifying Portfolios MC)
A summary of two stocks is shown.

\begin{tabular}{|c|l|l|l|l|}
\hline Name of Stock & Symbol & Closing Price Day 1 & Closing Price Day 2 & Closing Price Day 3 \\
\hline Unix Co & UNX & 8.15 & 8.78 & 8.06 \\
\hline Cubix Inc & CBX & 15.65 & 16.92 & 14.35 \\
\hline
\end{tabular}

Suppose you purchase 65 shares of Unix stock and 50 shares of Cubix stock on Day 1 at the closing price. On which of the following two days would it be best to sell both stocks, and by how much?

A. Day 2 is the best by $[/tex]\[tex]$104.45$[/tex].
B. Day 3 is the best by [tex]$\$[/tex]104.45[tex]$.
C. Day 2 is the best by $[/tex]\[tex]$70.85$[/tex].
D. Day 3 is the best by [tex]$\$[/tex]70.85$.



Answer :

First, we need to understand the scenario outlined in the question:

1. You purchase 65 shares of Unix stock (UNX) and 50 shares of Cubix stock (CBX) on Day 1 at their respective closing prices.
2. You want to determine on which day—Day 2 or Day 3—it would be best to sell both stocks to maximize your profit, and also calculate the profit for that best day.

### Step-by-Step Solution

#### Purchase Details
- Number of shares:
- Unix Co (UNX): 65 shares
- Cubix Inc (CBX): 50 shares

- Closing Prices on Day 1:
- UNX: \[tex]$8.15 per share - CBX: \$[/tex]15.65 per share

#### Total Cost on Day 1
1. Calculate the total cost for purchasing 65 shares of UNX:
[tex]\[ 65 \text{ shares} \times 8.15 \text{ \$} = 529.75 \text{ \$} \][/tex]
2. Calculate the total cost for purchasing 50 shares of CBX:
[tex]\[ 50 \text{ shares} \times 15.65 \text{ \$} = 782.50 \text{ \$} \][/tex]

3. The total cost for both stocks on Day 1:
[tex]\[ 529.75 \text{ \$} + 782.50 \text{ \$} = 1312.25 \text{ \$} \][/tex]

#### Revenue from Selling on Day 2
- Closing Prices on Day 2:
- UNX: \[tex]$8.78 per share - CBX: \$[/tex]16.92 per share

1. Calculate the total revenue from selling 65 shares of UNX on Day 2:
[tex]\[ 65 \text{ shares} \times 8.78 \text{ \$} = 570.70 \text{ \$} \][/tex]
2. Calculate the total revenue from selling 50 shares of CBX on Day 2:
[tex]\[ 50 \text{ shares} \times 16.92 \text{ \$} = 846.00 \text{ \$} \][/tex]

3. The total revenue from both stocks on Day 2:
[tex]\[ 570.70 \text{ \$} + 846.00 \text{ \$} = 1416.70 \text{ \$} \][/tex]

4. Calculate the profit for selling on Day 2:
[tex]\[ 1416.70 \text{ \$} - 1312.25 \text{ \$} = 104.45 \text{ \$} \][/tex]

#### Revenue from Selling on Day 3
- Closing Prices on Day 3:
- UNX: \[tex]$8.06 per share - CBX: \$[/tex]14.35 per share

1. Calculate the total revenue from selling 65 shares of UNX on Day 3:
[tex]\[ 65 \text{ shares} \times 8.06 \text{ \$} = 523.90 \text{ \$} \][/tex]
2. Calculate the total revenue from selling 50 shares of CBX on Day 3:
[tex]\[ 50 \text{ shares} \times 14.35 \text{ \$} = 717.50 \text{ \$} \][/tex]

3. The total revenue from both stocks on Day 3:
[tex]\[ 523.90 \text{ \$} + 717.50 \text{ \$} = 1241.40 \text{ \$} \][/tex]

4. Calculate the profit for selling on Day 3:
[tex]\[ 1241.40 \text{ \$} - 1312.25 \text{ \$} = -70.85 \text{ \$} \][/tex]

### Conclusion
Comparing the profits from Day 2 and Day 3:
- The profit on Day 2 is \[tex]$104.45. - The profit on Day 3 is -\$[/tex]70.85.

Day 2 is the best day to sell both stocks to maximize your profit, and the profit would be \[tex]$104.45. So, the answer to the question is: Day 2 is the best by \$[/tex]104.45.