191k views
0 votes
A portfolio comprises two​ stocks, A and​ B, with equal amounts of money invested in each. If stock​ A's stock price increases and that of stock B​ decreases, the weight of stock A in the portfolio will increase. True False

User Chhabilal
by
7.8k points

1 Answer

5 votes

Answer:

True

Step-by-step explanation:

When valuing the stock in portfolio, as for weighted average company considers the cost, whereas investor considers the market price, but in a portfolio of investor with weights as per market price the weight of stock increases provided other factors remain constant.

Therefore, here weight of Stock A will increase, accordingly as in comparison to Stock B its value has increased.

User Frobbit
by
8.7k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.