Question

Portfolio Weights If you own 725 shares of Air Line Inc at $42.9, 340 shares of BuyRite at $56.15, and 440 shares of Motor City at $10.15, what are the portfolio weights of each stock?

Answer 1

Step-by-step explanation:

Answer: the portfolio weights of each stock Air Line Inc, BuyRite and Motor City are 0.5690, 0.3493 and 0.0817 respectively.

Step-by-step explanation:

The total portfolio weight is given as

= 725 shares × $42.90 + 340 shares ×$56.15 + 440 shares × $10.15

=31,102.5 + 19,091 +4,466

=$54,659.5

Now the weight of each stock are as follows

For Air line inc

= 725 shares × $42.90 ÷$54,659.5

=31,102.5/54,659.5

= 0.5690

For Buyrite

= 340 shares × $56.15 ÷ $54,659.5

= 19,091 / 54,659.5

=0.3493

For Motor city

= 440 shares ×$10.15 ÷ $54,659.5

=4,466 /54,659.5

=0.0817