Question

You are considering how to invest part of your retirement savings.You have decided to put $400 000 into three​ shares: 57% of the money in Minerva​ (currently $29​/share), 23% of the money in Baumann​ (currently $96​/share), and the remainder in Martin Associates​ (currently $9​/share). Suppose Minerva shares go up to $35​/share, Baumann shares drop to $50​/share, and Martin Associates shares rise to $12 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?

a. What is the new value of the​ portfolio?

The new value of the portfolio is $ .......................... (Round to the nearest​ dollar.)

b. What return did the portfolio​ earn?

The portfolio earned a return of .......................... %. ​(Round to two decimal​ places.)

c. If you​ don't buy or sell any shares after the price​ change, what are your new portfolio​ weights?

If you​ don't buy or sell any shares after the price​ change, the weight of Minerva is now .......................... %. ​(Round to two decimal​ places.)  

The weight of Baumann is now .......................... ​%. ​(Round to two decimal​ places.)

The weight of Martin is now .......................... %. ​(Round to two decimal​ places.)

Answer 1

Summary:

a. New portfolio value = $429,756

b. The portfolio earned a return of 7.44%

c.  The weight of Minerva is now 64.03 %. ​

The weight of Baumann is now 11.15 %. ​

The weight of Martin Associates is now 24.82 %. ​

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