Question

What are the portfolio weights for a portfolio that has 124 shares of Stock A that sell for $34 per share and 104 shares of Stock B that sell for $24 per share? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., 32.1616.)

Answer 1

Stock A: 62.8129%

Stock B: 37.1871%

Step-by-step explanation:

The Portfolio Weight is the percentage of a certain stock within the portfolio. First we need to find the value of each stock in the portfolio, we do this by multiplying the price of the stock by the amount of shares in the portfolio.

Stock A:
`34*124 = 4,216`

Stock B:
`24*104 = 2,496`

Now we need to find the total amount of the portfolio by adding both stock totals together

Portfolio Total:
`4,216 + 2,496 = 6,712`

Finally to find the Portfolio Weight of each stock we need to divide the Stock Total by the Portfolio total, then multiply the results by 100 to get the percentage.

Stock A:
`(4.216)/(6.712) =  0.628128 * 100 =` 62.8129%

Stock B:
`(2,496)/(6.712) =  0.371871 * 100 =` 37.1871%