Question

You are considering how to invest part of your retirement savings.You have decided to put $300,000 into three? stocks: 66% of the money in GoldFinger? (currently $19?/share), 13% of the money in Moosehead? (currently $97?/share), and the remainder in Venture Associates? (currently $10?/share). Suppose GoldFinger stock goes up to $40?/share, Moosehead stock drops to $57?/share, and Venture Associates stock rises to $19 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?

Answer #1

No of shares of Goldfinger = 66%*300000/ 19 = 10421.0526
shares

No of shares of Moosehaead = 13% * 300000/97 = 402.0618

No of shares of Venture Assiociates = 21% * 300000 / 10 =
6300

a) New value of portfolio = No of shares of Goldfinger * Current
price/share + No of shares of Moosehaead * Current
price/share + No of shares of Venture Assiociates * Current
Price/share = 10421.0526 * 40 + 402.0618 * 57 + 6300 * 19 =
559,459.6266

b) Return of The protfolio = (559,459.6266-300,000)/300,000 =
86.49%

c)New Portfolio weight of Goldfinger = 10421.0526 *
40/559,459.6266 = 74.51%

Portfolio weight of Moosehaead = 402.0618 * 57 /559,459.6266=
4.097%

Portfolio weight of Venture Assiociates = 6300 * 19/559,459.6266 =
21.395%

Best of Luck. God Bless

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