Join thousands of students who trust us to help them ace their exams!Watch the first video
Multiple Choice
The portfolio weight is _____.
A
the risk-free rate used in portfolio analysis
B
the proportion of the total portfolio value invested in a particular asset
C
the total number of assets held in a portfolio
D
the expected return of the entire portfolio
Verified step by step guidance
1
Understand the concept of portfolio weight: Portfolio weight refers to the proportion of the total portfolio value that is invested in a particular asset. It is expressed as a percentage or fraction of the total portfolio value.
Identify the formula for portfolio weight: The formula is \( \text{Portfolio Weight} = \frac{\text{Value of Asset}}{\text{Total Portfolio Value}} \). This formula helps calculate the weight of each asset in the portfolio.
Determine the value of the specific asset: Gather the monetary value or market value of the asset you are analyzing within the portfolio.
Calculate the total portfolio value: Sum up the monetary values or market values of all assets held in the portfolio to determine the total portfolio value.
Apply the formula: Divide the value of the specific asset by the total portfolio value to calculate its portfolio weight. Ensure the result is expressed as a percentage or fraction.