You have $10,000 to invest. You want to purchase shares of Alaska Air at $42.56, Best Buy at $51.42, and Ford Motor at $8.56. How many shares of each company should you purchase so that your portfolio consists of 20 percent Alaska Air, 30 percent Best Buy, and 50 percent Ford Motor?

Question

Nadia David

Business

2 June, 17:47

You have $10,000 to invest. You want to purchase shares of Alaska Air at $42.56, Best Buy at $51.42, and Ford Motor at $8.56. How many shares of each company should you purchase so that your portfolio consists of 20 percent Alaska Air, 30 percent Best Buy, and 50 percent Ford Motor?

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Answers (1)

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Rosebud · Answer 1

Alaska = 46.99 units

Best buy = 58.34 units

Ford Motor = 584.11 units

Explanation:

To determine the unit of each class of stock to purchase, we wll multiply each of the percentages by the total fund to be arrive the proportion of fund to be invested in each class.

Further more, we will divide the allocated amount by the share price per unit

Shares to be purchased to have the given proportion would be '

Alaska (20%) = (20% * 10,000) / 42.56 = 46.99 units

Best buy (30%) = (30% * 10,000) / 51.42 = 58.34 units

Ford Motor (50%) = (50% * 10,000) / 8.56 = 584.11 units