A stock market comprises 5000 shares of stock A and 2000 shares of stock B.Assume the share prices for stocks A and B are $20 and $35,respectively.What proportion of the market portfolio is comprised of stock A?

Question

Quizplus · Accepted Answer

To find the proportion of the market portfolio that is comprised of stock A, we need to calculate the market value of stock A and the market value of the entire portfolio. 
Market value of stock A = 5000 x $20 = $100,000 
Market value of stock B = 2000 x $35 = $70,000 
Market value of entire portfolio = ($100,000 + $70,000) = $170,000
Proportion of the market portfolio comprised of stock A = (Market value of stock A / Market value of entire portfolio) x 100% = ($100,000 / $170,000) x 100% = 58.8%. Therefore, the best choice is A) 58.8%.

A Stock Market Comprises 5000 Shares of Stock a and 2000