Question

You have $15,000 to invest. You want to purchase shares of Alaska Air at $42.88, Best Buy at $51.32, and Ford Motor at $8.51. How many shares of each company should you purchase so that your portfolio consists of 30 percent Alaska Air, 40 percent Best Buy, and 30 percent Ford Motor?

Answer 1

one less share of one of these stocks should be purchased

Step-by-step explanation:

given data

invest = $15,000

purchase shares Alaska Air = $42.88

Best Buy = $51.32

Ford Motor = $8.51

Alaska Air portfolio consists = 30 percent

Best Buy portfolio consists = 40 percent

Ford Motor portfolio consists = 30 percent

to find out

How many shares of each company should you purchase

solution

we get here total share of Alaska Air and Best Buy and Ford Motor that is

Alaska Air = Alaska Air portfolio × investment ÷ purchase shares Alaska Air ................1

put here value

Alaska Air =
`(0.30*15000)/(42.88)`

Alaska Air = 105 shares

and

Best Buy = Best Buy portfolio × investment ÷ purchase shares Best Buy ................2

put here value

Best Buy =
`(0.40*15000)/(51.32)`

Best Buy = 117 shares

and

Ford Motor = Ford Motor portfolio × investment ÷ purchase shares Ford Motor ................3

put here value

Ford Motor =
`(0.30*15000)/(8.51)`

Ford Motor = 529 shares

so by rounding up it adds up to slightly more than $15,000

So here one less share of one of these stocks should be purchased