Suppose you are holding a portfolio that consists of stocks A
and B. Currently you have invested $12.000 on A and $10.000 on B.
What is the portfolio weight?
a. | |||||||||||
Weight of stock A | 0.55 | ||||||||||
Working: | |||||||||||
Weight of stock A | = | Investment in stock A/(Investment in stock A+Investment in Stock B) | |||||||||
= | $ 12.000 | / | (12.000+10.000) | ||||||||
= | 0.55 | ||||||||||
b. | |||||||||||
Weight of stock B | 0.45 | ||||||||||
Working: | |||||||||||
Weight of stock B | = | Investment in stock B/(Investment in stock A+Investment in Stock B) | |||||||||
= | $ 10.000 | / | (12.000+10.000) | ||||||||
= | 0.45 | ||||||||||
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