Suppose you buy 2500 shares of microsoft at 20 per share, Ask an Expert

Finance

Suppose you buy 2,500 shares of Microsoft at $20 per share and 3,500 shares of Pepsi at $35 per share. If Microsoft’s stock goes up to $30 per share and Pepsi stock falls to $30 per share and neither paid dividends, (1) What is the new value of the portfolio? What return did the portfolio earn? (2) Show that Eq. 11.2 is true by calculating the individual returns of the stocks and multiplying them by their weights in the portfolio. (3) If you don’t buy or sell any shares after the price change, what are the new portfolio weights?

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Financial Management, Finance

Category:- Financial Management
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