Question

Q39 A portfolio consists of 175 shares of Stock C that sells for $41 and 140 shares of Stock D that sells for $43. What is the portfolio weight of Stock C? Group of answer choices 0.4602 0.5398 0.3944 0.6073 0.5438

Answer 1

Weight of a particular stock in a portfolio is calculated based on the Market price of the shares. It is calculated by the following formula:

(Market price*no. of shares) of stock C / ((Market price*no. of shares) of stock C) +  (Market price*no. of

shares) of Stock D))

Sources	Shares	Price	Shares*price	Weights
Stock C	175	41	7175	7175/13195=0.5438
Stock D	140	43	6020	6020/13195= 0.4562
TOTAL			13195

hence, weight of stock C in the portfolio= 0.5438 (option E)