Question

A stock market comprises 4200 shares of stock A and 1800 shares of stock B. Assume the share prices for stocks A and B are $25 and $30, respectively. What proportion of the market portfolio is comprised of stock A? O A. $105,000 O B. 66% O C. -65% OD. $54,000

Answer 1

Total portfolio value = (Number of shares of stock A x Price per share of stock A) + (Number of shares of stock B x Price per share of stock B)

= (4,200 x $ 25) + (1,800 x $ 30) = $ 105,000 + $ 54,000 = $ 159,000

Proportion of stock A = Total value of stock A/Total portfolio value

                                      = (4,200 x $ 25)/ $ 159,000

                                      = $ 105,000 / $ 159,000

                                      = 0.660377358 or 66 %

66 % of market portfolio comprises of stock A.

Option “B. 66 %” is correct answer.