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A portfolio has 352 shares of Stock A that sell for $5.1 pershare and 271...

A portfolio has 352 shares of Stock A that sell for $5.1 per share and 271 shares of Stock B that sell for $84.11 per share. What is the portfolio weight of Stock A? Enter the answer in 4 decimals (e.g. 0.3044).

Consider the following information:

State Probability Stock A Stock B Stock C

Boom 0.65 -0.14 0.05 0.07

Bust 0.35 0.22 0.08 0.17

What is the expected return on an equally weighted portfolio of these three stocks? (Hint: Equally means that each stock has the same weight. Given that there are only 3 stocks, each has a weight of 1/3) Enter the answer with 4 decimals (e.g. 0.1234).

Consider the following information:

State Probability Stock A Stock B Stock C

Boom 0.32 0 0.24 0.01

Bust 0.68 -0.01 -0.09 -0.01

What is the expected return of a portfolio that has invested $1,115 in Stock A, $13,406 in Stock B, and   $6,125 in Stock C? (Hint: calculate weights of each stock first). Enter the answer with 4 decimals (e.g. 0.1234).

Solutions

Expert Solution

Answer 1

Stock A number of shares =352

Price = 5.1

Value of share A = number of Shares*price per Share

=352*5.1

=1795.2

Stock B number of shares =271

Price = 84.11

Value of share B = number of Shares*price per Share

=271*84.11

=1795.2

22793.81

Total value of Portfolio = value of stock A + value of stock B

=1795.2+22793.81

=24589.01

Weight of A in portfolio = Value of Stock A/Value Of portfolio

=1795.2/24589.01

=0.07300822603 or 0.0730

So weight of Stock A in portfolio is 0.0730

jeff jeffy answered 2 years ago
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