The price of Microsoft is $35 per share and that of Apple is $60 per share.The price of Microsoft increases to $37 per share after one year and to $40 after two years.Also,shares of Apple increase to $65 after one year and to $70 after two years.If your portfolio comprises 100 shares of each security,what is your portfolio return in year 1 and year 2? Assume no dividends are paid.

Question

Quizplus · Accepted Answer

The correct answer is A because the portfolio return in year 1 is (37-35+65-60)/((35+60)/2) = 7.37% and the portfolio return in year 2 is (40-37+70-65)/((37+65)/2) = 7.84%.

The Price of Microsoft Is $35 Per Share and That