Question

what are the portfolio weights for a portfolio that has 120 shares of stock a that sell for $30 per share and 100 shares of stock b that sell for $20 per share?

Answer 1

The portfolio weights are 64.29% for Stock A and 35.71% for Stock B, based on their respective values in the portfolio calculated by dividing the investment in each stock by the total portfolio value.

Step-by-step explanation:

To calculate the portfolio weights for a portfolio with different stocks, you need to find the total value invested in each stock and then divide it by the total value of the portfolio. Let's determine the weights for each stock in the given portfolio:

• Value of Stock A: 120 shares × $30/share = $3,600
• Value of Stock B: 100 shares × $20/share = $2,000
• Total Portfolio Value: $3,600 (Stock A) + $2,000 (Stock B) = $5,600

Now, we can calculate the portfolio weights:

• Weight of Stock A: $3,600 / $5,600 = 0.6429 or 64.29%
• Weight of Stock B: $2,000 / $5,600 = 0.3571 or 35.71%

So, the portfolio weights are 64.29% for Stock A and 35.71% for Stock B.