David has $10,000 worth of stocks in his trading account. He needs to cash in $1,000 worth of stock to make a purchase. He could sell shares in one stock (Jupiter, Inc.) that cost him $2,000 initially but is now only worth $1,000, or he could sell shares in another stock (Mercury Co.) that he bought for $500 but is now worth $1,000. Even though the amount of money withdrawn would be the same, which stock is he more likely to cash out?
A) Jupiter, Inc.
B) Mercury Co.
C) He is more likely to select a stock that was originally purchased at $1,000.
D) The original stock price will have no influence on his decision.
Correct Answer:
Verified
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