Question

Your portfolio consists of 115 shares of CSH and 55 shares of EJH, which you just bought at $18 and $31 per share, respectively. a. What fraction of your portfolio is invested in CSH? In EJH? b. If CSH increases to $20 and EJH decreases to $29, what is the return on your portfolio? a. What fraction of your portfolio is invested in CSH? In EJH? The fraction invested in CSH is %. (Round to one decimal place.) The fraction invested in EJH is %. (Round to one decimal place.) b. If CSH increases to $20 and EJH decreases to $29, what is the return on your portfolio? The return on the portfolio is %. (Round to one decimal place.)

Answer 1

Below table shows the proportions calculations:

Capital Source	Number	Price	Value	Weight
CSH	115	18	2070	55%
EJH	55	31	1705	45%
			3775	1

Value = Price x number Valuecsh = 18 x 115 = 2070 ValueEJH = 31 x 55 = 1705

Total Value = 2070+1705 = 3775

Value Weight = Total value - X 100 2070 csH=2770 X 100 = 55% 1705 Weight EJH = 3775

Now if the price changes as given in the question:

New value calculations are as follows:

Capital Source	Number	Price	Value	Weight
CSH	115	20	2300	59%
EJH	55	29	1595	41%
			3895	1

So the rate of return is calculated as follows:

return = New value – 1) x 100 Old value 3895 return = G -1) X 100 return = 3.2%