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Exercise

Weighted average (2)

Wait a minute, Lore taught us a much better way to do this! Remember, R does arithmetic with vectors! Can you take advantage of this fact to calculate the portfolio return more efficiently? Think carefully about the following code:

ret <- c(5, 7)
weight <- c(.4, .6)

ret_X_weight <- ret * weight

sum(ret_X_weight)

[1] 6.2

First, calculate ret * weight, which multiplies each element in the vectors together to create a new vector ret_X_weight. All you need to do then is add up the pieces, so you use sum() to sum up each element in the vector.

Now its your turn!

Instructions
100 XP
  • ret and weight for Microsoft and Sony are defined for you again, but this time, in vector form!
  • Add company names to your ret and weight vectors.
  • Use vectorized arithmetic to multiply ret and weight together.
  • Print ret_X_weight to see the results.
  • Use sum() to get the total portf_ret.
  • Print portf_ret and compare to the last exercise!
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