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What are the portfolio weights for a portfolio that has 135 shares of stock A that sell for $71 per share and 95 shares of stock B that sell for $84 per share?

Finance Dec 19, 2020

What are the portfolio weights for a portfolio that has 135 shares of stock A that sell for $71 per share and 95 shares of stock B that sell for $84 per share?

Expert Solution

Stock A: 54.5687%

Stock B: 45.4313%

In order to find the portfolio weights, we need to determine the total dollar value for each stock.

135 shares of stock valued at $71 each give Stock A a value of $9,585

95 shares of stock valued at $84 each give Stock B a value of $7,980

Add the two total values together to get a portfolio value of $17,565

Now divide each stock's value by the portfolio value to get the weights.

Stock A: 9,585 / 17,565 = 0.545687 or 54.5687%.

Stock B: 7,980 / 17,565 = 0.454313 or 45.4313%

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