A portfolio comprises two firms, A and B, with equal amounts of money invested in each. If firm A's share price increases and that of firm B decreases, the weight of firm A in the portfolio will increase.

Question

Quizplus · Accepted Answer

If firm A's share price increases and that of firm B decreases, it means that the proportion of the portfolio invested in firm A has increased while that of firm B has decreased. Since the portfolio originally had equal amounts invested in both firms, the weight of firm A will have increased.

A Portfolio Comprises Two Firms, a and B, with Equal