What are the portfolio weights for a portfolio that has 156 shares of Stock A that sell for $45 per share and 130 shares of Stock B that sell for $30 per share?

Problem 13-1 Determining Portfolio Weights [LO1]
What are the portfolio weights for a portfolio that has 156 shares of Stock A that sell for $45 per share and 130 shares of Stock B that sell for $30 per share? (Do not round intermediate calculations and round your answers to 4 decimal places, e.g., .1616.)


Explanation

The portfolio weight of an asset is the total investment in that asset divided by the total portfolio value. First, we will find the portfolio value, which is:

Total value = 156($45) + 130($30)

Total value =  $10,920

The portfolio weight for each stock is:

WeightA = 156($45)/$10,920

WeightA = .6429

WeightB = 130($30)/$10,920

WeightB = .3571