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3 years ago

Given $100,000 to invest, construct a value-weighted portfolio of the four stocks listed below.

Business

1 answer:

Reika [66]3 years ago

8 0

Answer:

Weight of Golden Seas in the portfolio = 1.40%

Weight of Jacobs and Jacobs in the portfolio = 2.42%

Weight of MAG in the portfolio = 88.94%

Weight of PDJB in the portfolio = 7.24%

Explanation:

This can be done as follows:

Step 1: Calculation of value of each stock

Value of stock can be calculated using the following formula:

Value of a stock = Price per share * Number of shares outstanding................ (1)

Using equation (1), we have:

Value of Golden Seas = $14 * 1.43 millions = $20.02 millions

Values of Jacobs and Jacobs = $24 * 1.44 millions = $34.56 millions

Value of MAG = $43 * 29.52 millions = $1,269.36 millions

Values of PDJB = $9 * 11.48 millions = $103.32 millions

Step 2: Calculation of value of the portfolio

This can be obtained by adding the values of all the stocks in step 1 as follows:

Value of the portfolio = Value of Golden Seas + Values of Jacobs and Jacobs + Value of MAG + Values of PDJB = $20.02 millions + $34.56 millions + $1,269.36 millions + $103.32 millions = $1,427.26 millions

Step 3: Calculation of weight of each stock in the portfolio

The weight of each stock in the portfolio is obtained as the values of each stock divided by the value of the portfolio. This can be calculated as follows:

Weight of Golden Seas in the portfolio = $20.02 millions / $1,427.26 millions = 0.0140, or 1.40%

Weight of Jacobs and Jacobs in the portfolio = $34.56 millions / $1,427.26 millions = 0.0242, or 2.42%

Weight of MAG in the portfolio = $1,269.36 millions / $1,427.26 millions = 0.8894, or 88.94%

Weight of PDJB in the portfolio = $103.32 millions / $1,427.26 millions = 0.0724, or 7.24%

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