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%

A) - 1.54%

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%