Question

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Your portfolio consists of 90 shares of CSH and 25 shares of​ EJH, which you just...

Your portfolio consists of 90 shares of CSH and 25 shares of​ EJH, which you just bought at $ 20 and $ 30 per​ share, respectively.

a. What fraction of your portfolio is invested in​ CSH? In​ EJH?

b. If CSH increases to $ 25 and EJH decreases to $ 29​, what is the return on your​ portfolio?

a. What fraction of your portfolio is invested in​ CSH? In​ EJH?

The fraction invested in CSH is __%.​(Round to one decimal​ place.)

The fraction invested in EJH is __​%. ​(Round to one decimal​ place.)

b. If CSH increases to $ 25 and EJH decreases to $ 29​, what is the return on your​ portfolio?The return on the portfolio is

__%. ​(Round to one decimal​ place.)

Solutions

Expert Solution

Solution:-

A. To Calculate the weight of Stock in Portfolio-

Market value of CSH share = 90 shares * $20

Market value of CSH share = $1,800

Market value of EJH share = 25 shares * $30

Market value of EJH share = $750

Total Portfolio value = Market value of CSH share + Market value of EJH share

Total Portfolio value = $1,800 + $750

Total Portfolio value = $2,550

Weight of CSH Stock in Portfolio =

Weight of CSH Stock in Portfolio =

Weight of CSH Stock in Portfolio = 70.59%

Weight of EJH Stock in Portfolio =

Weight of EJH Stock in Portfolio =

Weight of EJH Stock in Portfolio = 29.41%

B. To calculate Return on your portfolio-

Return on CSH Share =

Return on CSH Share = 25%

Return on EJH Share =

Return on CSH Share = -3.333%

Return on Portfolio is weighted Average Return

Return On Portfolio = 25% * 0.7059 + (-3.333%) * 0.2941

Return On Portfolio = 16.67%

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

jeff jeffy answered 1 year ago
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