What are the weights of stock in the market portfolio

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Reference no: EM133126301

We assume a stock market where there are only two stocks: stock A and stock B. The table below provides the following information regarding these two stocks: 

                                     Stock A           Stock B   

       Price                         $10                  $20 

Shares outstanding       1,000               1,500 

Standard deviation        30%                 20% 

a) What are the weights of each stock in the market portfolio? 

b) If the beta of stock A is 1.12, what is the beta of stock B? 

c) If the standard deviation of the market portfolio is 19.6%, what is the correlation coefficient, ρAB, between the two stocks' returns?

Reference no: EM133126301

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