Portfolio Weights If you own 400 shares of Air Line Inc.at $44.50,500 shares of BuyRite at $52.90,and 100 shares of MotorCity at $9.25,what are the portfolio weights of each stock?
A)Air Line = 0.3333, BuyRite = 0.3333, MotorCity = 0.3333
B)Air Line = 0.40, BuyRite = 0.50, MotorCity = 0.10
C)Air Line = 0.3940, BuyRite = 0.5855, MotorCity = 0.0205
D)Air Line = 0.4173, BuyRite = 0.4960, MotorCity = 0.0867

Question

Quizplus · Accepted Answer

The portfolio weight of each stock is calculated by dividing the value of the stock by the total value of the portfolio. The value of each stock is calculated by multiplying the number of shares by the price per share. The total value of the portfolio is the sum of the values of all the stocks.In this case, the value of Air Line is 400 * $44.50 = $17,800. The value of BuyRite is 500 * $52.90 = $26,450. The value of MotorCity is 100 * $9.25 = $925. The total value of the portfolio is $17,800 + $26,450 + $925 = $45,175.The portfolio weight of Air Line is $17,800 / $45,175 = 0.3940. The portfolio weight of BuyRite is $26,450 / $45,175 = 0.5855. The portfolio weight of MotorCity is $925 / $45,175 = 0.0205.

Portfolio Weights If You Own 400 Shares of Air Line