Question

What are the portfolio weights for a portfolio that has 148 shares of Stock A that sell for $35 per share and 110 shares of Stock B that sell for $24 per share

Answer 1

Weight A= 0.6624

Weight B= 0.3376

Step-by-step explanation:

From the question above,

Stock A has 148 shares at $35

Stock B has 110 shares at $24

The first step is to calculate the total amount of value

= 148($35)+110($24)

= $5,180+$2,640

= $7,820

Therefore the weight of each stock can be calculated as follows

Weight A= 148($35)/$7,820

= $5,180/$7,820

= 0.6624

Weight B= 110($24)/$7,820

= $2,640/$7,820

= 0.3376

Hence the portfolio weights are 0.6624 and 0.3376 respectively.