Use the Table for the Question(s)below

question 72

Multiple Choice

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

-A share market comprises 2 000 shares of company A and 2 000 shares of company B. The share prices for companies A and B are $20 and $10, respectively. What proportion of the market portfolio is comprised of each company?

• A)Company A is 200% and company B is 100%.
• B)Company A is 33.3% and company B is 66.7%.
• C)Company A is 66.7% and company B is 33.3%.
• D)Company A is $40 000 and company B is $20 000.

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Definitions:

Maximization

The process of seeking the highest possible outcome or result from a set of choices or actions.

Base Rates

Basic pay rates established for roles or tasks before any additional benefits or allowances are added.

Not-invented-here Bias

A mindset or culture where innovations or solutions developed outside a particular group are undervalued or rejected, regardless of merit.

Conservative Decisions

Decision-making approaches that prioritize risk-aversion and stability, often favoring traditional methods over innovative solutions.