Question

Assume you hold a portfolio in which you own 100 shares of Exxon Mobil Corporation (XOM), 50 shares of Alphabet Inc. (GOOG), and 100 shares of Walmart Inc (WMT). Set up the calculations needed to determine the total market value of your portfolio if the current market prices of the three stocks are as follows: XOM = $45; GOOG = $1200; WMT = $125. Notes: 1) Assume you are holding a passive, value-weighted portfolio that mimics the market (this helps this problem fit in chapter 12). 2) Setting up means writing down the appropriate equations and plugging in the correct numbers.

Answer 1

Given =

No. of shares of -

Exxon Mobil Corporation (XOM) = 100

Alphabet Inc. (GOOG) = 50

Walmart Inc (WMT) = 100

And Current Market price of -

Exxon Mobil Corporation (XOM) = $ 45

Alphabet Inc. (GOOG) = $ 1200

Walmart Inc (WMT) = $ 125

Applying the formula-

Market Value of portfolio = Σ (No. of shares * Current market price) of each stock

Therefore -

Market Value of  Exxon Mobil Corporation (XOM) = (100 * 45) = 4500

+

Market Value of Alphabet Inc. (GOOG) = ( 50 * 1200) = 60000

+

Market Value of Walmart Inc (WMT) = (100 * 125) = 12500

So Market Value of portfolio = 4500 + 60000 + 12500

= 77000  

Weight of each stock in the portfolio

Stock name

Weight

Exxon Mobil Corporation (XOM)	(4500 / 77000) * 100 = 5.84%
Alphabet Inc. (GOOG)	(60000 / 77000) * 100 = 77.92%
Walmart Inc (WMT)	(12500 / 77000) * 100 = 16.23%