A portfolio contains three stocks (Stock A,Stock B,and Stock C).The overall value of the portfolio increased 20 percent during 2010⎯the value of Stock A increased by 15 percent,the value of Stock B increased by 22 percent,and the value of Stock C increased by 30 percent.If 40 percent of the total funds in the portfolio were in Stock A at the beginning of 2010,what was the percent of funds (weight)invested in stock B?
A) 50%
B) 30%
C) 10%
D) 60%
E) 40%

Question

Quizplus · Accepted Answer

The overall portfolio increased by 20%, and we know the increase percentages for each stock and the weight of Stock A. To find the weight of Stock B, we can use the weighted average formula for the overall increase. Given that 40% of the funds were in Stock A, which increased by 15%, and the overall portfolio increased by 20%, we can infer that the remaining 60% of the portfolio (Stock B and Stock C) must have had a higher average increase to lift the entire portfolio's performance to 20%. Since Stock C had a very high increase of 30%, it's reasonable to assume that Stock B, with a 22% increase, constituted a significant portion of the remaining 60%. Without the exact amounts invested in each stock, we can't calculate the exact percentages through a simple explanation. However, given the options and understanding that Stock B must have a significant weight to balance out the increases, 50% is the most plausible option for the weight of Stock B in the portfolio.

A Portfolio Contains Three Stocks (Stock A,Stock B,and Stock C)