Question

If you own 100 shares of Air Line Inc. at $42.50, 250 shares of BuyRite at $53.25, and 350 shares of MotorCity at $7.75, what are the portfolio weights of each stock

Answer 1

Answer and Explanation:

The computation of the weights of portfolio of each stock is shown below:

But before that first we have to determine the total portfolio i.e.

= 100 shares × $42.50 + 250 shares × $53.25 + 350 shares × $7.75

= $20,275

Now the weightage of each stock are as follows

For air line inc

= 100 shares × $42.50 ÷ $20,275

= 0.2096

For Buyrite

= 250 shares × $53.25 ÷ $20,275

= 0.6566

For Motor city

= 350 shares × $7.75 ÷ $20,275

= 0.1338