Question

You are considering how to invest part of your retirement savings. You have decided to put $200,000 into three stocks: 50% of the money in GoldFinger (currently $25/share), 25% of the money in Moosehead (currently $80/share), and the remainder in Venture Associates (currently $2/share). If GoldFinger stock goes up to $30/share, Moosehead stock drops to $60/share, and Venture Associates stock rises to $3 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 shares after the price change, what are your new portfolio weights?

Answer 1

Portfolio During Investment :
Stocks	No of Shares	Price per share	Total Value	Weight in portfolio.
GoldFinger	4,000	$                25.00	$    100,000.00	50.00%
Moosehead	625	$                80.00	$      50,000.00	25.00%
Venture Associates	25,000	$                   2.00	$      50,000.00	25.00%
Total	29,625		$   200,000.00	100%

Portfolio after Price change
Stocks	No of Shares	Price per share	Total Value	Weight in portfolio.
GoldFinger	4,000	$                30.00	$    120,000.00	51.61%
Moosehead	625	$                60.00	$      37,500.00	16.13%
Venture Associates	25,000	$                   3.00	$      75,000.00	32.26%
Total	29,625		$   232,500.00	100%

Ans a.
New Value of the Portfolio is =	$    232,500.00
Ans b.
New Value of the Portfolio is =	$    232,500.00
Value of portfolio during investment	$    200,000.00
Gain in portfolio =	32,500
Return on Portfolio=32500/200000=	16.25%

Ans c.
New Portfolio weights are :	Weight in portfolio.
GoldFinger	51.61%
Moosehead	16.13%
Venture Associates	32.26%
Total	100%