Question

You have purchased 75 shares of Games Inc. for $ 96 and 120 shares of Thrones...

You have purchased 75 shares of Games Inc. for $ 96 and 120 shares of Thrones Co for 450.

Over the following three quarters, the companies earned the returns below

Quarter 1

Quarter 2

Quarter 3

Games Inc.

20%

8%

3%

Thrones Co.

-20%

-20%

-20%

What was the buy-and-hold return on your portfolio?

Provide your answer in percent, rounded to two decimals, omitting the % sign.

Show work please!

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Answer #1

Games

Purchase Price = $96
Number of shares = 75
Purchase Value = 75*96 = $7200
Value after Quarter 1 = 7200*(1+0.20) = $8640
Value after Quarter 2 = 8640*(1+0.08) = $9331.2
Value after Quarter 3 = 9331.2*(1+0.03) = $9611.14

Thrones

Purchase Price = $450
Number of shares = 120
Purchase Value = 450*120 = $54000
Value after Quarter 1 = 54000*(1-0.20) = $43200
Value after Quarter 2 = 43200*(1-0.20) = $34560
Value after Quarter 3 = 34560*(1-0.20) = $27648

Total Purchase Value of Portfolio = 7200 + 54000 = $61200

Total Value after 3 Quarters = 9611.14 + 27649 = $37260.14

Buy and Hold Return = (Current Value - Purchase Price)/Purchase Price *100%

= (37260.14 - 61200)/61200 * 100%

= -39.12%

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