Question

An investor owns $3,000 of Adobe Systems stock, $6,000 of Dow Chemical, and $7,000 of Office Depot. What are the portfolio weights of each stock? (Round your answers to 4 decimal places.)

Answer 1

Answer:

0.1875; 0.375; 0.4375

Explanation:

Given that,

Adobe Systems stock = $3,000

Dow Chemical = $6,000

Office Depot = $7,000

Total Value of stock:

= Adobe Systems stock + Dow Chemical + Office Depot

= $3,000 + $6,000 + $7,000

= $16,000

Portfolio weights of Adobe Systems stock:

= Value of Adobe Systems stock ÷ Total Value of stock

= $3,000 ÷ $16,000

= 0.1875

Portfolio weights of Dow Chemical stock:

= Value of Dow Chemical stock ÷ Total Value of stock

= $6,000 ÷ $16,000

= 0.375

Portfolio weights of Office Depot stock:

= Value of Dow Chemical stock ÷ Total Value of stock

= $7,000 ÷ $16,000

= 0.4375