A stock market comprises 2000 shares of stock A and 2000 shares of stock B.The share prices for stocks A and B are $20 and $10,respectively.What proportion of the market portfolio is comprised of each stock?

Question

Quizplus · Accepted Answer

To calculate the proportion of each stock in the market portfolio, we need to calculate the total value of each stock and then divide it by the total value of the portfolio. 
Total value of stock A = 2000 shares x $20/share = $40,000 
Total value of stock B = 2000 shares x $10/share = $20,000 
Total value of portfolio = $40,000 + $20,000 = $60,000 
Proportion of stock A = $40,000/$60,000 = 0.667 or 66.7% 
Proportion of stock B = $20,000/$60,000 = 0.333 or 33.3% 
Therefore, the best choice is A as it correctly shows the proportions of each stock in the market portfolio.

A Stock Market Comprises 2000 Shares of Stock a and 2000