An investor owns $2,000 of Adobe Systems stock, $4,000 of Dow Chemical, and $6,000 of Office Depot. What are the portfolio weights of each stock?
A) Adobe System = 0.3333, Dow Chemical = 0.3333, Office Depot = 0.3333
B) Adobe System = 0.1667, Dow Chemical = 0.3333, Office Depot = 0.5
C) Adobe System = 0.3333, Dow Chemical = 0.1667, Office Depot = 0.5
D) Adobe System = 0.2, Dow Chemical = 0.4, Office Depot = 0.6

Question

Quizplus · Accepted Answer

The portfolio weights are calculated by dividing the value of each investment by the total value of the portfolio. The total value is $2,000 (Adobe) + $4,000 (Dow) + $6,000 (Office Depot) = $12,000. Thus, the weights are Adobe: $2,000/$12,000 = 0.1667, Dow: $4,000/$12,000 = 0.3333, Office Depot: $6,000/$12,000 = 0.5.

An Investor Owns $2,000 of Adobe Systems Stock, $4,000 of Dow