Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Consider the following data for two stocks: Stock Date Price Shares Outstanding A 01/2022 10] 4,000 B 01/2022 30 2,000 A 02/2022 5 4,000 B

image text in transcribed Consider the following data for two stocks: Stock Date Price Shares Outstanding A 01/2022 10] 4,000 B 01/2022 30 2,000 A 02/2022 5 4,000 B 02/2022 40 2,000 4 (a) (5 points) At the end of January 2022 you form a value-weighted portfolio. For each stock i it's weight in a value-weighted portfolio is the market value of stock i divided by the total market value of all stocks in the portfolio: MV MV where the market value is calculated as the price times the shares outstanding. Calculate the weights of the value-weighted portfolio formed at the end of January 2022. (b) (5 points) Calculate the returns of the value-weighted portfolio during February 2022. (c) (10 points) At the end of February 2022, have your portfolio weights changed? If yes, calculate the new portfolio weights. (d) (5 points) If you want to maintain a value-weighted portfolio, do you have to rebalance your port- folio? Why or why not? (Said differently, at the end of February 2022, if you form a new value- weighted portfolio are the weights the same or different compared to the weights calculated in part c above.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting Tools for Business Decision Making

Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso, Ibrahim M. Aly

4th Canadian edition

1118856996, 978-1118856994

More Books

Students also viewed these Accounting questions

Question

Find the vector PP2 given P(3,5,6). P2(0, -1,7)

Answered: 1 week ago