Question

Create a portfolio that invests 24% of $1 million in company A, 22% in company B,...

Create a portfolio that invests 24% of $1 million in company A, 22% in company B, 20% in company C, 18% in company D, and 16% in company E. The stocks are as follows: Apple, Microsoft, Macy’s, Facebook, and Amazon.

What is the buy-and-hold return (HPR) for each of the 5 stocks and for the portfolio during the last calendar year (2018)? Please show work.

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Answer #1
Apple Microsoft Macy's Facebook Amazon Portfolio
01-Jan 168.99 93 23.04 186.85 1,229.14
31-Jan 155.56 101.14 29.31 131.09 1,501.97
% Returns -7.95% 8.75% 27.21% -29.84% 22.20% 3.64%
Weights 24% 22% 20% 18% 16%

Find the price of stocks at the beginning and end of 2018 from Yahoo Finance.

% Returns = P1 / P0 - 1

Given the weights of each stock in the portfolio

Portfolio Returns = 24% x -7.95% + 22% x 8.75% + 20% x 27.21% + 18% x -29.84% + 16% x 22.20% = 3.64%

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