Homework Answers
| Question | ||
| Information in the Question | ||
| Stock | Amount Invested | Return |
| L | $ 2,400.00 | -6.0% |
| M | $ 10,000.00 | 7.5% |
| N | $ 3,600.00 | 12.6% |
| Total Invested | $ 16,000.00 | |
| Calculation of Weightage of each Stock |
| =Amount Invested in Each Stock/ Total Invested |
| Formula for Calculating Portfolio Return |
| =Rp = ∑ni=1 wi ri |
| w is the weight of each stock |
| r is the return of an stock |
| Stock | Amount Invested | Retun (Ri) | Weights (Wi) Formula | Weights (Wi) Value | WiRi Formula | WiRi |
| L | $ 2,400.00 | -6.0% | =2,400/16,000 | 0.15 | =0.15*-6.0% | -1% |
| M | $ 10,000.00 | 7.5% | =10,000/16,000 | 0.625 | =0.625*7.5% | 5% |
| N | $ 3,600.00 | 12.6% | =3,600/16,000 | 0.225 | =0.225*12.6% | 3% |
| Total Invested | $ 16,000.00 | 1.00 | 7% |
Return of Portfolio = 7%
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