Math Problem Statement

You are considering how to invest part of your retirement savings.You have decided to put $ 200 comma 000 into three​ stocks: 67 % of the money in GoldFinger ​(currently $ 23​/share), 18 % of the money in Moosehead ​(currently $ 96​/share), and the remainder in Venture Associates​ (currently $ 8​/share). Suppose GoldFinger stock goes up to $ 31​/share, Moosehead stock drops to $ 50​/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?

Solution

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Math Problem Analysis

Mathematical Concepts

Portfolio Allocation
Percentage Calculations
Stock Valuation

Formulas

Amount Invested = Percentage × Total Investment
Number of Shares = Amount Invested ÷ Share Price
New Portfolio Value = Number of Shares × New Share Price
Return = (New Portfolio Value - Original Investment) ÷ Original Investment × 100
Portfolio Weights = New Value of Each Stock ÷ New Portfolio Value

Theorems

Basic principles of portfolio management and return calculation

Suitable Grade Level

College Level (Finance/Investment)