Question

In: Finance

You are considering how to invest part of your retirement savings.You have decided to put $300,000...

You are considering how to invest part of your retirement savings.You have decided to put $300,000 into three​ stocks: 59% of the money in GoldFinger​ (currently $29​/share), 7% of the money in Moosehead​ (currently $73​/share), and the remainder in Venture Associates​ (currently $7​/share).

Suppose GoldFinger stock goes up to $43​/share, Moosehead stock drops to $55​/share, and Venture Associates stock drops to $2 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?

Solutions

Expert Solution

Solution:-

First we need to Calculate Number of share will be purchased of Each stock-

Number of share of Gold Finger = = 6,103.45 Shares

Number of share of Moosehead = = 287.67 Shares

Number of share of Venture Associates = = 14,571.43 Shares

A. To Calculate New Value of Portfolio-

New Value of Portfolio = 6,103.45 Shares * $43 + 287.67 shares * $55 + 14,571.43 shares * $2

New Value of Portfolio = $3,07,413.

B. To Calculate the Return of Portfolio-

Return =

Return = 2.47%

C. To Calculate New Portfolio Weights-

Weight of Gold Finger = = 85.37%

Weight of Moosehead = = 5.15%

Weight of Venture Associates = = 9.48%

If you have any query related to question then feel free to ask me in a comment.Thanks. Please rate.


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