Market caps of five stocks are as follows: BAC: $231.48B, F: $46.18B, GE: $258.82B, MCD: $105.93B,JNJ: $340.16B.

(a) What is the composition of a value-weighted portfolio of these stocks?

(b) Suppose the returns on the stocks during the next quarter are −2.5%, 3.4%, −1.7%, 4.2% and0.9%. What is the return on the portfolio during the quarter?

(c) What is the composition of the portfolio at the end of the quarter?

Answer rating: 100% (QA)

a The composition of a valueweighted portfolio is determined by the market caps of the stocks relati... View the full answer