Suppose you invest in 100 shares of Merck at $40 per share and 100 shares of Yahoo at $25 per share.If the price of Merck increases to $45 and the price of Yahoo decreases to $22 per share,what is the return on your portfolio?

Question

Quizplus · Accepted Answer

First, let's calculate the initial investment in each stock:
100 shares of Merck at $40 per share = $4,000
100 shares of Yahoo at $25 per share = $2,500

After the price changes, the value of each stock is:
100 shares of Merck at $45 per share = $4,500
100 shares of Yahoo at $22 per share = $2,200

The total value of the portfolio is now $6,700 ($4,500 + $2,200). The initial investment was $6,500 ($4,000 + $2,500).

Therefore, the return on the portfolio is:
($6,700 - $6,500) / $6,500 = 3.08%

So the answer is C) 3.08%.

Suppose You Invest in 100 Shares of Merck at $40