Question

5.You bought 300 shares of Apache (APA) at $46.50 per share, 200 shares ofDelta Airlines (DAL)for $58.75a share and 400 shares of Nielson Holdings (NLSN)for $27.25per share. What is the portfolio weight on the Delta Airlines holding?

A.less than 0.318

B.more than 0.318 but less than 0.322

C.more than 0.322 but less than 0.326

D.more than 0.326 but less than 0.330

E.more than 0.330

6.You bought 300 shares of Apache (APA) at $46.50 per share, 200 shares of Delta Airlines (DAL) for$58.75 a share and 400 shares of Nielson Holdings (NLSN) for $27.25 per share. If Apache returns 12.5%, Deltareturns 9.75% and Nielson 18.5%, what was your portfolio's return?

A.less than 12.25percent

B.more than 12.25 percent but less than 12.60 percent

C.more than 12.60 percent but less than 12.95percent

D.more than 12.95 percent but less than 13.30 percent

E.more than 13.30percent

Answer 1

Weight is calculated on the basis of market value.

The return of a portfolio is the weighted average return of the securities which constitute the porfolio

Stock	no. of shares	Market price per share	Market value	Weight	Expected Return (%)	Weight*Expected Return
Apache (APA)	300	46.5	13,950(300*46.5)	0.381(13950/36600)	12.5	4.76
Delta Airlines (DAL)	200	58.75	11,750(200*58.75)	0.321(11750/36600)	9.75	3.13
Nielson Holdings (NLSN)	400	27.25	10,900(400*27.25)	0.298(10900/36600)	18.5	5.51

Total market value = 13950+11750+10900

= 36600

QUESTION 5

B.more than 0.318 but less than 0.322

QUESTION 6

Portfolio Return = Weight*Expected Return

= 4.76+3.13+5.51

= 13.40%

E.more than 13.30 percent