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17 July, 10:12

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

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  1. 17 July, 11:43
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    True

    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.
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