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)
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