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25. 25.Suppose that you hold a portfolio consisting of three indices: the S&P 500, the Dow...

25.

25.Suppose that you hold a portfolio consisting of three indices: the S&P 500, the Dow Jones Industrial Average (DJIA), and the Russell 2000 index. The value of the investment in each index and the indexes on May 11, 2020, are as follows:

IndexPortfolio ValueIndex on May 11, 2020S&P 5006,0002,930.19DJIA2,00024,221.99Russell 20002,0001,321.24Total10,000

  

These are the values of the indexes generated for May 12, 2020, under the first scenario:

ScenarioS&P 500DJIARussell 200012,825.1324,397.201,357.04

  

What is a loss from the portfolio under the first scenario?

$105.95

$146.47

$253.42

$3,154.07

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Answer #1

S&P 500 index value has decreased from 2930.19 to 2825.13

value of investment on S&P 500 = Amount invested * index value on may 11 / index value on may 12  

= 6000 * 2825.13 / 2930.19 =5784.874

value of investment on DJIA = 2000 * 24397.20 / 24221.99 = 2014.467

Value of investment on Russels 2000 = 2000* 1357.04 / 1321.24 = 2054.19

total portfolio value on 12 may = 5784.874 + 2014.467 + 2054.19 = 9853.527

loss on portfolio = 10000 - 9853.527 = 146.47

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