Question

Suppose you invest in 100 shares of Harley-Davidson (HOG) at $40 per share and 230 shares ofYahoo (YHOO) at $25 per share. If the price of Harley-Davidson increases to $50 and the priceof Yahoo decreases to $20 per share, what is the return on your portfolio?A) -1.54%B) 12.25%C) -10.50%D) -5.20%

Answer 1

A) -1.54%

Step-by-step explanation:

First, find the total amount invested in these two shares;

Amount invested in HOG shares = 100 *$40 = $4000

Amount invested in YHOO shares = 230 *$25 = $5750

Total amount invested = $5750 + $4000= $9750

Next, find the new total value of these shares;

New value of HOG shares = 100 *$50 = $5000

New value of YHOO shares = 230 *$20 = $4600

Total value = $4600 + $5000= $9600

Find the percentage change in value to determine your return;

% return = [New value - original value/ original ] *100

= [ ($9600 - $9750) / $9750 ] *100

= -0.01538 *100

= -1.54%