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Consider a portfolio that includes the following two​ companies: Company 1 Company 2 Day Price Number...

Consider a portfolio that includes the following two​ companies:

Company 1

Company 2

Day

Price

Number of Shares

Price

Number of Shares

  1

​$8.00

550

​$11.00

1,350

  2

​$8.34

550

​$11.54

1,350

On Day 1 the portfolio has weights which are equal to the value of each​ company's shares relative to the total value of both companies. What is the portfolio weight for Company​ 1?

The portfolio weight for Company 1 on Day 1 is

____​%.

​(Round to two decimal​ places.)

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Answer #1

value of each company = (number of shares * price per share)

portfolio weight for each company = value of company / total value of both companies

Value of Company​ 1 = 550 * $8 = $4,400

Value of Company​ 2 = 1350 * $11 = $14,850

Total value of both companies = $4,400 + $14,850 = $19,250

Weight of Company 1 =  $4,400 / $19,250 = 22.86%

Weight of Company 2 =  $14,850 / $19,250 = 77.14%

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