Question

A portfolio has three stocks - 300 shares of Yahoo (YHOO),300 Shares of General Motors (GM),and 100 shares of Standard and Poor's Index Fund (SPY).If the price of YHOO is $20,the price of GM is $30,and the price of SPY is $150,calculate the portfolio weight of YHOO and GM.

A) 10%, 20%
B) 15%, 25%
C) 20%, 30%
D) 20%, 40%
E) 43%, 43%

Answer 1

Answer:

The answer is C) 20%, 30%

Explanation:

First we need to calculate the value of the respective investments in the different shares.

Yahoo - 300 x $20 = $600

General Motors - 300 x $30 = $900

SPY - 100 x $150 = $1500

Now we need to express Yahoo and GM as a percentage over the total value. The total value is $ 3000

Yahoo - 600/3000 x 100 = 20%

GM - 900/3000 x 100 = 30%

Therefore the answer is C) 20%, 30%

Answer 2

Answer:

C) 20%   30%

Explanation:

Weight is the ratio of a specific investment in a portfolio. it is calculated by taking ratio of a specific investment and total value of portfolio.

Shares                                          No. of Shares     Price    Value

Yahoo (YHOO),                             300 Shares      $20       $6,000

General Motors (GM),                   300 Shares      $30       $9,000

Standard and Poor's Fund (SPY) 100 shares        $150    $15,000

Total                                              700 shares                   $30,000

YHOO has only value of $6,000 out of the total portfolio of $15,000, its weight can be calculated as below.

Weight of Yahoo = Value of Yahoo shares / Total Portfolio Value

Weight of Yahoo = $6,000 / $30,000 = 0.2 = 20%

GM has only value of $9,000 out of the total portfolio of $15,000, its weight can be calculated as below.

Weight of Yahoo = Value of GM shares / Total Portfolio Value

Weight of Yahoo = $9,000 / $30,000 = 0.3 = 30%