You are considering how to invest pan of your retirement savings. You have decid

ID: 2718304 • Letter: Y

Question

You are considering how to invest pan of your retirement savings. You have decided to put $200,000 into three stocks: 69% of the money in GoldFinger (currently $15/share), 15% of the money in Moosehead (currently $76/share), and the remainder in Venture Associates (currently $5/share). Suppose GoldFinger stock goes up to $35/share, Moosehead stock drops to $62/share, and Venture Associates stock rises to $18 per share. What is the new value of the portfolio? What return did the portfolio earn? If you don't buy or sell any shares after the price change, what are your new portfolio weights? For c, count the new portfolio weights for GoldFinger, Moosehead, and Venture Associates.

Explanation / Answer

working

GOLDFINDER

MOOSEHEAD

VENTURE ASSOCIATES

portfolio

WEIGHT

0.69

0.15

0.16

INVESTMENT

200000x row 1

138000

30000

32000

200000

CURRENT MARKET PRICE

NO OF SHARES

row (2/4)

9200

394.74

6400

NEW SHARE PRICE

vaulue based on new market price

row (4x5)

322000

24473.68421

115200

461,673.68

NEW VALUE OF PORTFOLIO (SUM OF ABOVE)

sum of row 6

461,673.68

RETURN ON PORTFOLIO (461673.68-200000)/200000

130.84%

NEW PORTFOLIO WEIGHT

row (6/7)

0.70

0.05

0.25