Consider a world that only consists of the three stocks shown inthe following? table:
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a. Calculate the total value of all shares outstandingcurrently.
b. What fraction of the total value outstanding does each stockmake? up?
c. You hold the market? portfolio, that? is, you have pickedportfolio weights equal to the answer to part b with each? stock'sweight is equal to its contribution to the fraction of the totalvalue of all stocks. What is the expected return of your?portfolio?
Stock
Total Number
of Shares Outstanding
Current Price per Share
Expected Return
First Bank
101101 million
?$8282
2020?%
Fast Mover
5959 million
?$132132
1313?%
Funny Bone
190190 million
?$3232
1414?%
