Question

In: Finance

A stock market comprises 4600 shares of stock A and 2000 shares of stock B. Assume...

A stock market comprises 4600 shares of stock A and 2000 shares of stock B. Assume the share prices for stocks A and B are $25 and $35, respectively. What is the market capitalization of this market portfolio?

A) $185,000

B) $157,250

C) $175,750

D) $203,500

Expert Solution

Market capitalization is computed using the below formula:

= Current price of share*Outstanding number of shares.

Market capitalization of stock A:

= $25*4,600 shares

= $115,000

Market capitalization of stock B:

=35*2,000 shares

= $70,000

Market capitalization of the market portfolio = Market capitalization of stock A + Market capitalization of stock B

= $115,000 + $70,000

= $185,000.

Hence, the answer is option a.

In case of any query, kindly comment on the solution

jeff jeffy answered 1 year ago

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