Portfolio Weights If you own 100 shares of Air Line Inc. at $42.50, 250 shares of BuyRite at $53.25, and 350 shares of Motor City at $7.75, what are the portfolio weights of each stock?
A) Air Line = .3333, BuyRite = .3333, MotorCity = .3333
B) Air Line = .10, BuyRite = .25, MotorCity = .35
C) Air Line = .2096, BuyRite = .6566, MotorCity = .1338
D) Air Line = .1429, BuyRite = .3571, MotorCity = .5000

Question

Quizplus · Accepted Answer

To calculate the portfolio weight for each stock, first calculate the total value of the portfolio, which is (100 shares of Air Line * $42.50/share) + (250 shares of BuyRite * $53.25/share) + (350 shares of Motor City * $7.75/share) = $13,562.50. Then, divide the value of each stock by the total value of the portfolio.

For Air Line: (100 shares * $42.50/share) / $13,562.50 = 0.2096 or 20.96%
For BuyRite: (250 shares * $53.25/share) / $13,562.50 = 0.6566 or 65.66%
For Motor City: (350 shares * $7.75/share) / $13,562.50 = 0.1338 or 13.38%

Therefore, the correct answer is C, as it provides the correct portfolio weight for each stock.

Portfolio Weights If You Own 100 Shares of Air Line