You are considering how to invest part of your retirement savings. You have decided to put $ 400 comma 000 into three stocks: 56 % of the money in GoldFinger (currently $ 16 /share), 18 % of the money in Moosehead (currently $ 77 /share), and the remainder in Venture Associates (currently $ 4 /share). Suppose GoldFinger stock goes up to $ 41 /share, Moosehead stock drops to $ 69 /share, and Venture Associates stock rises to $ 17 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?

Money invested in Gold finger = 56% of $400,000 = $224,000

No. of stocks of Gold finger purchased = $224,000 / $16 = 14,000 shares.

Money invested in Moose head = 18% of $400,000 = $72,000.

No. of stocks of Moose head = $72,000/$77 = 935 shares

Money invested in Venture Associates = 400,000 - (224,000-72,000) = $104,000

No. of stocks of Venture Associates = $104,000/$4 = 26000 shares

New value of portfolio = (14,000 shares * $41) + (935 shares*$69) + (26000 shares*$17)

= $574,000 + $64,515 + $ 442,000

= $1,080,515

1. Thus portfolio value after all changes in stock prices are accounted for = $1,080,515

2. % change in portfolio = (1080515-400000) / 400000 = 170%

3. Weight of each stock in the portfolio:

Weight of Gold finger = (574,000) / 1080515 = 53.12%

Weight of Moose head = (64,515) / 1080515 = 5.97%

Weight of Venture Associates = (442,000) / 1080515 = 40.91%