You have a portfolio with the following Environmental Risk Scores for each of your investments. Given the weights in each investment, what is the Environmental Risk Score for your portfolio? If the weights don't sum to one then the remainder is in cash with no environmental risk. (Answer to one decimal place, 6.1)

Tesla Ford Chevron Home Depot JP Morgan Starbucks Microsoft
Weight (in %) 9 14 5 5 7 14 11
Env Risk Score 4 11 15 5 3 9 6

Question

You have a portfolio with the following Environmental Risk Scores for each of your  investments. Given the weights in each investment, what is the Environmental Risk Score for your portfolio? If the weights don't sum to one then the remainder is in cash with no environmental risk. (Answer to one decimal place, 6.1)

Tesla	Ford	Chevron	Home Depot	JP Morgan	Starbucks	Microsoft
Weight (in %)	9	14	5	5	7	14	11
Env Risk Score	4	11	15	5	3	9	6

BlackTom AI · Accepted Answer

The question asks for the Environmental Risk Score of the portfolio, given individual weights and environmental risk scores, with any uninvested cash not contributing risk. 
First, add up the weights to see how much is invested versus in cash. 9 + 14 + 5 + 5 + 7 + 14 + 11 = 65. This means 65% is invested and the remaining 35% is in cash with zero environmental risk.
Next, compute the weighted sum of the environmental risk scores for the invested portion: 
- Tesla: 9% * 4 = 36
- Ford: 14% * 11 = 154
- Chevron: 5% * 15 = 75
- Home Depot: 5% * 5 = 25
- JP Morgan: 7% * 3 = 21
- Starbucks: 14% * 9 = 126
- Microsoft: 11% * 6 = 66
Sum = 36 + 154 + 75 + 25 + 21 + 126 + 66 = 503.
Since the cash portion has zero environmental risk, the total portfolio risk contribution is still 503, but it should be averaged over the total portfolio value of 100% to get a single Environmental Risk Score.
Divide the weighted sum by 100 (the total portfolio percentage): 503 / 100 = 5.03.
Rounding to one decimal place gives 5.0.
Thus, the portfolio's Environmental Risk Score, to one decimal place, is 5.0. 
Note: This method assumes the risk score is linearly weighted by the percentage allocation and that cash contributes zero risk, as stated in the prompt.

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