Question

Suppose you invested $4,500 in Stock X and $5,500 in Stock Y. Stock X price was...

Suppose you invested $4,500 in Stock X and $5,500 in Stock Y. Stock X price was $45 per share and now worth $49. Stock Y was $13.75 and now is priced at $20.35 per share.

a. What is your dollar return on this portfolio investment?

b. What is your percentage return on this portfolio investment?

Homework Answers

Answer #1

a. Dollar return = ((Price of Stock X now - Price of Stock X when invested)/Stock X price)* Investment in Stock X +  ((Price of Stock Y now - Price of Stock Y when invested)/Stock Y price) * Investment in Stock Y

Dollar return = ((49 - 45)/45)*4,500 + ((20.35 - 13.75)/13.75) * 5,500

Dollar return = (4/45) * 4,500 + (6.6/13.75) * 5,500

Dollar return = 400 + 2,640

Dollar return = $3,040

b. Percentage return = Dollar return/Total investment

Percentage return = 3,040/(4,500 + 5,500)

Percentage return = 3,040/10,000

Percentage return = 0.304

Percentage return = 30.4%

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