You Believe That You Can Earn 2% More on Your

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 .5%. You have an $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