Question

An investment portfolio consists of four stocks. The purchase price, current price, and number of shares are reported in the following table. Stock Purchase Price/Share Current Price/ Share Number of Shares Holiday Trans 15.50 17.00 500 NY Electric 18.50 20.25 200 KY Gas 26.75 26.99 500 PQ Soaps 42.25 45.50 300 Construct a weighted average of price relatives as an index of the performance of the portfolio to date. Interpret this index.

Answer 1

The data as provided is:

Stock	Purchase Price/Share ($)	Current Price/Share ($)	Number of Shares
Holiday Trans	15.5	17	500
NY Electric	18.5	20.25	200
KY Gas	26.75	26.99	500
PQ Soaps	42.25	45.5	300

The weighted average of price relative as an index of portfolio performance to date is:

This implies, that the price-index has increased from 100 to 105.8533, indicating that the portfolio value has increased 5.8533%