Question

Stock   Market Cap

OGG   $50

HNL    $72

KOA   $18

LIH     $10

Given the following​ information construct a​ value-weighted portfolio of the four stocks if you have $497,000 to invest. That​ is, how much of your $497,000 would you invest in each​ stock?

Answer 1

Stock	Market cap or market value
OGG	$50
HNI	$72
KOA	$18
LIH	$10
Total	$150

The investment is $497,000. To calculate the amount invested in each stock in value-weighted portfolio-

Value-weighted index = Total investment value of portfolio /total market cap of portfolio

Where,

Total investment value of the portfolio of four stocks = 497,000

total market cap of portfolio = 150

Therefore,

Value-weighted index =497,000 / 150 = 3313.33

The amount invested in each stock in value-weighted portfolio-

OGG = 3313.33 * $50 = $165,666.67

HNI = 3313.33 * $72 = $238,560

KOA = 3313.33 * $18 = $59,640

LIH = 3313.33 * $10 = $33,133.33