Use the table for the question(s)below.
Consider the following expected returns, volatilities and correlations:

-A share market comprises 5 000 shares of company A and 2 000 shares of company B. Assume the share prices for companies A and B are $20 and $35, respectively. What is the capitalisation of the market portfolio?

Question

Use the table for the question(s)below.
Consider the following expected returns, volatilities and correlations:
 
-A share market comprises 5 000 shares of company A and 2 000 shares of company B. Assume the share prices for companies A and B are $20 and $35, respectively. What is the capitalisation of the market portfolio?

Quizplus · Accepted Answer

The capitalisation of the market portfolio can be calculated as follows:
Market value of company A = 5,000 shares * $20 per share = $100,000
Market value of company B = 2,000 shares * $35 per share = $70,000
Total market value of the portfolio = $100,000 + $70,000 = $170,000
Therefore, the correct answer is B.

Use the Table for the Question(s)below