A stock market is composed of 2400 shares of stock A and 2400 shares of stock B. The share prices...
Question:
A stock market is composed of 2400 shares of stock A and 2400 shares of stock B. The share prices for stocks A and B are $15 and $5, respectively. What is the capitalization of the market portfolio?
A) $43,200
B) $48,000
C) $55,200
D) $52,800
Market Capitalization:
A company's market capitalization is determined by its current market price and the value of all of its outstanding shares. To understand the true value of a corporation, it is essential to know its market capitalization. Market capitalization can categorize companies as large, mid, or small.
Answer and Explanation: 1
In order to calculate the capitalization of the market portfolio, we will use the following formula:
Capitalization of the market portfolio = (Number of shares of stock A * Price per share of stock A) + (Number of shares of stock B * Price per share of stock B)
Capitalization of the market portfolio = (2,400 * $15) + (2,400 * $5)
Capitalization of the market portfolio = $48,000
The correct option is B
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Market Capitalization: Definition & Formula
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Chapter 6 / Lesson 30
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Read about market capitalization and how it reflects the value of a company's stock. Learn to calculate market cap using the market capitalization formula.
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