Question

Suppose that Merck (MRK) stock is trading for $36.70 per share with 2.11 billion shares outstanding while Boeing (BA) has 697.5 million shares outstanding and a market capitalization of $38.223 billion. Assume that you hold the market portfolio. Merck's market capitalization is closest to: _________

a. 330 shares.
b. 240 shares.
c. 780 shares.
d. 510 shares.

Answer 1

the question asks one thing, but the options are not even close:

market capitalization = total stocks outstanding x market price per stock

Merck's market capitalization = 2.11 billion stocks x $36.70 = $77.437 billion

Market capitalization is about money, not the number of shares. It represents the market value of a company's equity.