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You are considering how to invest part of your retirement savings
You are considering how to invest part of your retirement savings. You have decided to put $300,000 into three stocks: 65% of the money in GoldFinger (currently $28/share), 18% of the money in Moosehead (currently $94/share), and the remainder in Venture Associates (currently $6/share). Suppose GoldFinger stock goes up to $33/share, Moosehead stock drops to $58/share, and Venture Associates stock rises to $8 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 $ J. (Round to the nearest dollar.)
Expert Solution
Total retirement Savngs available = $300,000
| Stock | Weight(A) | Investment($300,000*A) | Price/Share(B) | No. of Shares(A/B) |
| Goldfinger | 65% | $ 195,000 | $ 28 | 6,964 |
| Moosehead | 18% | $ 54,000 | $ 94 | 574 |
| Venture Associates | 17% | $ 51,000 | $ 6 | 8,500 |
| Total | 100% | $ 300,000 |
| Stock | No. of Shares(A) | Price/Share(B) | Total Value(A*B) |
| Goldfinger | 6,964 | $ 33 | $ 229,812 |
| Moosehead | 574 | $ 58 | $ 33,292 |
| Venture Associates | 8,500 | $ 8 | $ 68,000 |
| New Value of Portfolio | $ 331,104 |
b.
| Return on Portfolio = $331,104 - $300,000 |
| Return on Portfolio = $31,104 |
| Return on Portfolio = $31,104/$300,000 = 10.37% |
c.
| Stock | No. of Shares | Price/Share (A) | Total Value(B) | New Weight(B/$331,104) |
| Goldfinger | 6964 | $ 33 | $ 229,812 | 69.41% |
| Moosehead | 574 | $ 58 | $ 33,292 | 10.05% |
| Venture Associates | 8500 | $ 8 | $ 68,000 | 20.54% |
| New Value of Portfolio | $ 331,104 |
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