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8 October, 19:10

You have a portfolio consisting solely of Stock A and Stock B. The portfolio has an expected return of 10.2 percent. Stock A has an expected return of 11.7 percent while Stock B is expected to return 8.3 percent. What is the portfolio weight of Stock A?

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  1. 8 October, 19:22
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    Weight of Stock A is 55,88%

    Explanation:

    We know Weight Stock A + Weight Stock B = 1 so, Stock B=1 - Stock A

    (Stock A*11.7) + (Stock B * 8.3) = 10.2

    (Stock A*11.7) + ((1 - Stock A) * 8.3) = 10.2

    (11.7 Stock A) + (8.3 - 8.3 Stock A) = 10.2

    (11.7 Stock A) - 8.3 Stock A=10.2-8.3

    3,4 Stock A=1,9

    Stock A=1,9/3,4=0,5588 55,88%
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