When Computing the Expected Return on a Portfolio of Stocks

question 61

Multiple Choice

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.

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Definitions:

Values

The importance, worth, or usefulness of something, often determined by personal principles or market conditions.

Bid

An offer of a certain price for something, especially in contexts like auctions or financial markets, where it reflects the amount a buyer is willing to pay.

English Auction

A type of public auction where bids are openly made and raised until no higher bids are forthcoming, with the highest bidder winning the item.

Rational Self-Interest

The principle that individuals tend to make decisions that they believe are best for themselves, maximizing their own utility.