Final answer:
The expected rate of return on a stock portfolio using a weighted average is based on the market value of each stock in the portfolio.
Step-by-step explanation:
When calculating the expected rate of return on a stock portfolio using a weighted average, the weights are based on the market value of the investment in each stock. This is because the return on each component stock in the portfolio contributes to the overall return in proportion to the size of the investment in each stock. Therefore, larger investments have a greater impact on the total performance of the portfolio than smaller investments.