Question

Homework help!!

You are considering how to invest part of your retirement savings. You have decided to put $200,000 into three stocks: 66% of the money in GoldFinger (currently $2B/share), 18% of the money in Moosehead (currently $88/share), and the remainder in Venture Associates (currently $9/share). Suppose GoldFinger stock goes up to $31/share, Moosehead stock drops to $59/share, and Venture Associates stock rises to $15 per share. a. What is the new value of the portfolio? b. What return did the portfolio earn? c. If you don't buy or sell any shares after the price change, what are your new portfolio weights ? a. What is the new value of the portfolio? The new value of the portfolio is $ (Round to the nearest dollar.) b. What return did the portfolio earn? The portfolio earned a return of %. (Round to two decimal places.) c. If you don't buy or sell any shares after the price change, what are your new portfolio weights? The weight of Goldfinger is now l%. (Round to two decimal places.) Question Viewer The weight of Moosehead is now %. (Round to two decimal places.) The weight of Venture is now %. (Round to two decimal places.)

Answer 1

a.

First we need to calculate the number of shares

Company	Allocation	Amount Invested	Original price	Number of shares	Current price	Current value
Goldfinger	66%	$             132,000	$               28	4,714.29	31	146,142.86
Moosehead	18%	$               36,000	$               88	409.09	59	24,136.36
Venture associates	16%	$               32,000	$                  9	3,555.56	15	53,333.33
	100%	$             200,000				$ 223,612.55

b.

Return = (223,612.55 - 200,000) / 200,000 X 100 = 11.81%

c.

Company	Allocation	Amount Invested	Original price	Number of shares	Current price	Current value	New Weights
Goldfinger	66%	$             132,000	$               28	4,714.29	31	146,142.86	65.36%
Moosehead	18%	$               36,000	$               88	409.09	59	24,136.36	10.79%
Venture associates	16%	$               32,000	$                  9	3,555.56	15	53,333.33	23.85%
	100%	$             200,000				$ 223,612.55	100%