Question

Use the following information to answer the​ question(s) below.

Suppose all possible investment opportunities in the world are limited to the four stocks list in the table​ below:

Stock	Price per Share	Number of Shares Outstanding ​(Millions)
Taggart Transcontinental	​$15.60	25
Rearden Metal	​$13.00	45
Wyatt Oil	​$29.25	10
Nielson Motors	​$26.25	26

The weight on Wyatt Oil stock in the market portfolio is closest​ to:

A.

​25%

B.

​20%

C.

​30%

D.

​15%

Answer 1

Weight of individual stock = Dollar value of security/Total dollar value of portfolio

	Price per Share (a)	Number of Shares outstanding (b) million	Value of Stock (a x b) million
Taggart Transcontinental	15.6	25	390.00
Rearden Metal	13	45	585.00
Wyatt Oil	29.25	10	292.50
Nielson Motors	26.25	26	682.50
Total value of market portfolio	1,950.00

Weight of Wyatt Oil = 292.50 million/1,950 million = 0.15 or 15 %

Hence option “D. 15 %” is correct answer.