Question

You are considering how to invest part of your retirement savings.You have decided to put $500,000 into three​ stocks:51% of the money in GoldFinger​ (currently $28​/share), 17% of the money in Moosehead​ (currently $79​/share), and the remainder in Venture Associates​(currently $9​/share).Suppose GoldFinger stock goes up to $43/share, Moosehead stock drops to $51​/share, and Venture Associates stock drops to $2 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: ________ ​(Round to two decimal​ places.)  

The weight of Moosehead is now: ________ ​(Round to two decimal​ places.)

The weight of Venture is now: ________ ​(Round to two decimal​ places.)

Answer 1

Answer to The Questions asked (Calculations are Given after the Answers)

a) New Value of the Portfolio is $482033

b) Return of Portfolio is -3.59%

c) Portfolio Weights are Goldfinger = 0.82 , Moosehead = 0.11 , Venture = 0.07

Working Notes

Calculation of No of Shares Purchased

Stock	% invested	Value Invested	Price Per Share	No of Shares
	(a)	(b) = ($500000 * a)	(c)	(d) = b*c
Gold Finger	51%	255000	$28	9107
Moosehead	17%	85000	$79	1076
Venture Associates	32%	160000	$9	17778

New Value of Portfolio

Stock	No of Shares	Price per Share	Value Of Shares
	(a)	(b)	(a*b)
Gold Finger	9107	$43	$3,91,601
Moosehead	1076	$51	$54,876
Venture Associates	17778	$2	$35,556
Total			$4,82,033

Return on Portfolio =

(New Value of Portfolio-Amount Invested) Amount Invested 100

                                  =   

$ 482033-S50 00 0 0)100 $500000

                                  = -3.5934 %

Weight of Portfolio

Stock	No of Shares	Price per Share	Value Of Shares	Weight of Portfolio
	(a)	(b)	c = (a*b)	d = (c/$ 482033)
Gold Finger	9107	$43	$3,91,601	0.82
Moosehead	1076	$51	$54,876	0.11
Venture Associates	17778	$2	$35,556	0.07
Total			$4,82,033