Asked by Rebecca Dooley on May 02, 2024
Verified
When computing the expected return on a portfolio of stocks the portfolio weights are based on the:
A) Number of shares owned in each stock.
B) Price per share of each stock.
C) Market value of the total shares held in each stock.
D) Original amount invested in each stock.
E) Cost per share of each stock held.
Portfolio Weights
The percentages of each asset in a portfolio, indicating the relative size of each investment within the portfolio.
Market Value
The price at this moment for buying or selling an asset or service in the market.
Shares Held
Refers to the quantity of stock units owned by an individual or entity at any given time.
- Gain insight into the process of determining the expected return of a portfolio and understand the importance of the distribution of investments across the portfolio.
Verified Answer
NS
Nolan SchueMay 06, 2024
Final Answer :
C
Explanation :
The expected return on a portfolio of stocks is calculated based on the market value of the total shares held in each stock. This approach takes into account the current value of the investments, reflecting the proportion of each stock's value relative to the total portfolio value, which is crucial for accurately assessing expected returns.
Learning Objectives
- Gain insight into the process of determining the expected return of a portfolio and understand the importance of the distribution of investments across the portfolio.
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