When computing the expected return on a portfolio of stocks the portfolio weights are based on the:
A) Number of shares owned in each stock.
B) Price per share of each stock.
C) Market value of the total shares held in each stock.
D) Original amount invested in each stock.
E) Cost per share of each stock held.

Question

Quizplus · Accepted Answer

The expected return on a portfolio of stocks is calculated based on the market value of the total shares held in each stock. This approach takes into account the current value of the investments, reflecting the proportion of each stock's value relative to the total portfolio value, which is crucial for accurately assessing expected returns.

When Computing the Expected Return on a Portfolio of Stocks