You are considering how to invest part of your retirement savings.You have decid
ID: 1171835 • Letter: Y
Question
You are considering how to invest part of your retirement savings.You have decided to put $400 000 into three shares 59% of the money in Minerva currently $21/share 15% of the money in Baumann currently $95 share and the remainder in Martin Associates currently $8 share). Suppose Minerva shares go up to $43/share, Baumann shares drop to $60/share, and Martin Associates shares drop to $5 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? a. What is the new value of the portfolio? The new value of the portfolio is (Round to the nearest dollar.) b. What return did the portfolio earn? The portfolio earned a return of[ %, (Round to two decimal places.) c. If you don't buy or sell any shares after the price change, what are your new portfolio weights? If you don't buy or sell any shares after the price change, the weight of Minerva is now %. (Round to two decimal places.) The weight of Baumann is now (Round to two decimal places.) The weight of Martin is now 196. (Round to two decimal places.)Explanation / Answer
Company
Weight in portfolio
Weight in decimal
amount invested = weight*value of portfolio
price per share
no of shares = investment in shares/no of shares
Minerva
51%
0.51
204000
21
9714.2857
Baumann
15%
0.15
60000
95
631.57895
Martin
34.00%
0.34
136000
8
17000
total
100
400000
new value of portfolio
Company shares
no of shares
new market price
Minerva
9714.286
21
204000
Baumann
631.5789
95
60000
Martin
17000
5
85000
value of portfolio
349000
return the portfolio earned
(current value of portfolio-previous value of portfolio)/previous value of portfolio
(349000-400000)/400000
-12.75%
Company stock
new value of stock
New weight = new value of stock/total value of portfolio
Minerva
204000
58.45%
Baumann
60000
17.19%
Martin
85000
24.36%
value of portfolio
349000
Company
Weight in portfolio
Weight in decimal
amount invested = weight*value of portfolio
price per share
no of shares = investment in shares/no of shares
Minerva
51%
0.51
204000
21
9714.2857
Baumann
15%
0.15
60000
95
631.57895
Martin
34.00%
0.34
136000
8
17000
total
100
400000
new value of portfolio
Company shares
no of shares
new market price
Minerva
9714.286
21
204000
Baumann
631.5789
95
60000
Martin
17000
5
85000
value of portfolio
349000
return the portfolio earned
(current value of portfolio-previous value of portfolio)/previous value of portfolio
(349000-400000)/400000
-12.75%
Company stock
new value of stock
New weight = new value of stock/total value of portfolio
Minerva
204000
58.45%
Baumann
60000
17.19%
Martin
85000
24.36%
value of portfolio
349000
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