Question at position 9 What is the weight on Alphabet for a portfolio that is long $7M Tesla stock, long $3M Amazon, and short $5M Alphabet? Express your answer as a decimal (NOT percent).AnswerWhat is the weight on Alphabet for a portfolio that is long $7M Tesla stock, long $3M Amazon, and short $5M Alphabet? Express your answer as a decimal (NOT percent).[input]

Question

Question at position 9 What is the weight on Alphabet for a portfolio that is long $7M Tesla stock, long $3M Amazon, and short $5M Alphabet? Express your answer as a decimal (NOT percent).AnswerWhat is the weight on Alphabet for a portfolio that is long $7M Tesla stock, long $3M Amazon, and short $5M Alphabet? Express your answer as a decimal (NOT percent).[input]

BlackTom AI · Accepted Answer

First, identify the positions and their monetary values: long 7M in Tesla, long 3M in Amazon, and short 5M in Alphabet. Next, compute the total portfolio value by summing the signed positions: 7M + 3M + (-5M) = 5M. The weight of Alphabet is its position value divided by the total portfolio value: (-5M) / (5M) = -1.0. This result indicates Alphabet makes up a negative one unit of the total portfolio value, reflecting that it is a short position and equal in magnitude to the entire long exposure of the portfolio.

If the total value had been different, the weight would change accordingly, but with these numbers the math simplifies to -1.0. Note that because the denominator is the net market value of all positions, the weight can be negative when there is a net short exposure, as is the case here. Also, ensure you express the weight as a decimal rather than a percentage, which is why -1.0 is the correct format in this context.

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