Question 20 An investor owns $10,000 of Adobe Systems stock, $15,000 of Dow Chem
ID: 2642027 • Letter: Q
Question
Question 20
An investor owns $10,000 of Adobe Systems stock, $15,000 of Dow Chemical, and $25,000 of Office Depot. What are the portfolio weights of each stock?
Adobe Systems = 0.3333, Dow Chemical = 0.3333, Office Depot = 0.3333.
Adobe Systems = 0.2, Dow Chemical = 0.3, Office Depot = 0.5.
Adobe Systems = 0.3, Dow Chemical = 0.2, Office Depot = 0.5.
Adobe Systems = 0.2667, Dow Chemical = 0.3333, Office Depot = 0.4.
a.Adobe Systems = 0.3333, Dow Chemical = 0.3333, Office Depot = 0.3333.
b.Adobe Systems = 0.2, Dow Chemical = 0.3, Office Depot = 0.5.
c.Adobe Systems = 0.3, Dow Chemical = 0.2, Office Depot = 0.5.
d.Adobe Systems = 0.2667, Dow Chemical = 0.3333, Office Depot = 0.4.
Explanation / Answer
The portfolio weight of each stock is as follows:
b. Adobe Systems = 0.2, Dow Chemical = 0.3, Office Depot = 0.5
The calculations are as follows:
The total sum of all investments = $10000+$15000+$25000 = $50,000
The portfolio of Adobe systems is = 10000/50000 = 0.2
The portfolio of Dow Chemical is = 15000/50000 = 0.3
The portfolio of Office Depot is = 25000/50000 = 0.5
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