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.

Question

Quizplus · Accepted Answer

The portfolio weights should be based on the market value of the total shares held in each stock. This takes into account both the number of shares owned and the price per share, providing a more accurate representation of the overall investment in each stock. The original amount invested or the cost per share are not relevant when computing expected return.

When Computing the Expected Return on a Portfolio of Stocks