Question

The price of Microsoft is $32 per share and that of Apple is 559 per share. The price of Microsoft increases to $39 per share after one year and to 542 after two years Also, shares of Apple increase to 566 after one year and to $71 after two years. If your portfolio comprises 100 shares of each security, what is your portfolio return in year 1 and year 2? Assume no dividends are paid. O A. 15.38%, 7.62% OB 17.69%, 13.71% O C. 18.46%, 11.43% OD. 22.31%, 8.38%

Answer 1

Option A

A B C D E F G Н. 1 Value now 2 3 Microsoft=number of shares*value/share 4 Apple 3200 5900 After 1 year Profit=value after 1 year-value now 3900 700 6600 700 6 9100 10500 1400 15.38% =profit/value now*100 7 8 9 10 Microsoft 11 Apple 12 13 Portfolio value 14 15 Value after 1 year After 2 year Profit=value after 2 year-value after 1 year 3900 4200 300 6600 7100 500 10500 11300 800 7.62% =profit/value after one year* 100

A B D E F 1 2 Value now 3 Microsoft=number of shares*value/share=32*100 4. Apple =59* 100 After 1 year =39*100 =66*100 Profit=value after 1 year-value now =C3-B3 =C4-B4 =SUM(B3:35) =SUM(C3:05) =C6-B6 =D6/B6 =profit/value now*100 6 7 8 9 10 Microsoft 11 Apple 12 13 Portfolio value 14 15 16 Value after 1 year =39*100 =66*100 After 2 year =42*100 =71*100 Profit=value after 2 year-value after 1 year =C10-310 =C11-B11 =SUM(B10:B12) =SUM(C10:C12) =C13-B13 =D13/B13 =profit/value after one year*100