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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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