Asked by Kayla Driffin on May 12, 2024
Verified
Which of the following is the best definition of portfolio weights?
A) Percentage of a portfolio's total value in a particular asset.
B) Group of assets such as stocks and bonds held by an investor.
C) The difference between the return on a risky investment and a risk-free investment
D) Return on a risky asset expected in the future.
E) Equation of the SML showing the relationship between expected return and beta.
Portfolio Weights
The percentages of the total investment that are held in various components of a portfolio.
Portfolio's Total Value
The sum of all assets, including securities and cash, within an investment portfolio.
Particular Asset
Refers to a specific asset that is identifiable and distinguishable from other assets owned by an individual or entity.
- Acquire knowledge about how portfolio weights affect both the risk and returns of a portfolio.
Verified Answer
EN
Emily NavarroMay 19, 2024
Final Answer :
A
Explanation :
Portfolio weights refer to the fraction or percentage of the total value of a portfolio that is invested in a particular asset. This concept is crucial for understanding and managing the diversification and risk of an investment portfolio.
Learning Objectives
- Acquire knowledge about how portfolio weights affect both the risk and returns of a portfolio.