Question

Given $100,000 to invest, construct a value-weighted portfolio of the four stocks listed below. Stock Price/Share ($) Number of Shares Outstanding (millions) 1.21 1.27 30.77 13.96 Golden Seas Jacobs and Jacobs MAG PDJB 24 48 Enter the portfolio weight below: (Round to two decimal places.) Stock Golden Seas % of Total Value (portfolio weight) %

Answer 1

First we will calculate the value of each stock by multiplying price per share by the number of shares outstanding as per below:

Golden seas : $14 * 1.21 = $16.94

Jacobs & Jacobs:$24 * 1.27 = $30.48

MAG: $48 * 30.77 = $1476.96

PDJB: $14 * 13.96 = $195.44

Total value of portfolio = $16.94 + $30.48 + $1476.96 + $195.44 = $1719.82

Next, we will calculate the weights or percentage of each stock in the portfolio by dividing the value of the stock by the total value in the portfolio as per below:

Golden seas : $16.94 / $1719.82 * 100= 0.98%

Jacobs & Jacobs: $30.48 / $1719.82 * 100 = 1.77%

MAG: $1476.96 / $1719.82 * 100 = 85.89%

PDJB: $195.44 / $1719.82 * 100 = 11.36%

Now, the portfolio of $100000 will include the following amounts of each stock:

Golden seas: $100000 * 0.98% = $980

Jacobs & Jacobs : $100000 * 1.77% = $1770

MAG: $100000 * 85.89% = $85890

PDJB: $100000 * 11.36% = $11360