The correct answer is: B. calculating the percentage each asset is to the total portfolio value.
Portfolio weights are the percentage of each asset that is held in a portfolio. They are calculated by dividing the value of each asset by the total value of the portfolio. For example, if a portfolio has a total value of $100,000 and it holds $50,000 worth of asset A, $25,000 worth of asset B, and $25,000 worth of asset C, then the portfolio weights for asset A, asset B, and asset C are 50%, 25%, and 25%, respectively.
Portfolio weights are important because they determine the risk and return of the portfolio. The higher the portfolio weight of an asset, the more the portfolio will be affected by changes in the price of that asset. Therefore, it is important to choose portfolio weights that are appropriate for the investor’s risk tolerance and investment objectives.
Option A is incorrect because standard deviation is a measure of risk, not return. Option C is incorrect because the return of each asset is not the same as the total portfolio return. Option D is incorrect because expected value is not the same as standard deviation.