Question

You are considering how to invest part of your retirement savings.You have decided to put $ 200,000 into three​ stocks: 55 % of the money in GoldFinger​ (currently $ 25​/share), 30 % of the money in Moosehead​ (currently $ 97​/share), and the remainder in Venture Associates​ (currently $ 1​/share). If GoldFinger stock goes up to $ 38​/share, Moosehead stock drops to $ 65​/share, and Venture Associates stock rises to $ 8 per share

(a) What is the new value of the portfolio?
(b) What return did the portfolio earn?

Answer 1

Answer:

• new value of port folio = $447435
• return on portfolio = $247435

Explanation:

Total invested fund = $200000

55% of the fund = 55% of $200000 = $110000

30% of the fund = 30% of $200000 = $60000

15% of the fund = 15% of $200000 = $30000

Gold finger at $25/share = $110000 therefore total shares = 4400 shares

Moose head at $97/share = $60000 therefore total shares = 619 shares

venture associates at $1/share = $30000 therefore total shares = 30000 shares.

If Gold finger stocks rises to $38/share Gold finger will be worth

= $38 * 4400 = $167200

if Moose head drops to $65/share Moose head will be worth

= $65 * 619 = $40235

If venture associates rises to $8/share venture associates will be worth

= $8 * 30000 =  $240000

The new value of the portfolio will be

$167200 + $40235 + $240000 = $447435

The portfolio made a return of

= $447435 - $200000 = $247435