If you own 100 shares of Air Line Inc. at $42.50, 250 shares of BuyRite at $53.25, and 350 shares of MotorCity at $7.75, what are the portfolio weights of each stock?
A) Air Line = 0.3333, BuyRite = 0.3333, MotorCity = 0.3333
B) Air Line = 0.10, BuyRite = 0.25, MotorCity = 0.35
C) Air Line = 0.2096, BuyRite = 0.6566, MotorCity = 0.1338
D) Air Line = 0.1429, BuyRite = 0.3571, MotorCity = 0.5000

Question

Quizplus · Accepted Answer

To calculate the portfolio weights, first find the total value of each investment and then divide by the total portfolio value. Air Line Inc. = 100 shares * $42.50 = $4,250. BuyRite = 250 shares * $53.25 = $13,312.50. MotorCity = 350 shares * $7.75 = $2,712.50. Total portfolio value = $4,250 + $13,312.50 + $2,712.50 = $20,275. Portfolio weights: Air Line = $4,250 / $20,275 = 0.2096, BuyRite = $13,312.50 / $20,275 = 0.6566, MotorCity = $2,712.50 / $20,275 = 0.1338.

If You Own 100 Shares of Air Line Inc