You are considering how to invest part of your retirement savings. You have deci

Question

You are considering how to invest part of your retirement savings. You have decided to

put $600,000 into three stocks: 54% of the money in GoldFinger (currently $22/share), 13%

of the money in Moosehead (currently $86/share), and the remainder in Venture Associates

(currently $9/share). If GoldFinger stock goes up to $37/share, Moosehead stock drops to

$53/share, and Venture Associates stock rises to $20 per share,

a. What is the new value of the portfolio?

b. What return did the portfolio earn?

c. If you don

Explanation / Answer

Stock Amount Current price of each stock change in price of stocks New Value of Portfolio New Portfolio Weights Gold finger 324000 22 37 544909.09 0.53 Moosehead 78000 86 53 48069.77 0.05 Venture Associates 198000 9 20 440000 0.43 600000 New Value of Portfolio 1032978.86 1.00 Return on protfolio (1032978.86 - 600000)/600000 0.721631433 I.e 72.16%

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