Question

A portfolio has three stocks long dash 220 shares of Yahoo​ (YHOO), 110 shares of General Motors​ (GM), and 40 shares of Standard and​ Poor's Index Fund​ (SPY). If the price of YHOO is​ $30, the price of GM is​ $30, and the price of SPY is​ $130, calculate the portfolio weight of YHOO and GM.

Answer 1

0.4371 and 0.2185

Step-by-step explanation:

For computing the portfolio weight, first we have to determine the total value which is shown below:

For Yahoo:

220 shares × $30 = $6,600

For General motors:

110 shares × $30 = $3,300

For Standard and​ Poor's Index Fund​:

40 shares × $130 = $5,200

So, the total value would be

= $6,600 + $3,300 + $5,200

= $15,100

So, the portfolio weight of YHOO and GM would be

= $6,600 ÷ $15,100 = 0.4371

And, for GM, it would be

= $3,300 ÷ $15,100 = 0.2185