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 proportion of the market portfolio is comprised of company A?

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 proportion of the market portfolio is comprised of company A?

Quizplus · Accepted Answer

The total market value is calculated by multiplying the number of shares by their respective prices and then summing these values. For company A, it's 5,000 shares * $20 = $100,000. For company B, it's 2,000 shares * $35 = $70,000. The total market value is $100,000 + $70,000 = $170,000. The proportion of company A is $100,000 / $170,000 = 0.588, or 58.8%.

Use the Table for the Question(s)below