In: Finance
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.)
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%
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