The price of Microsoft is $30 per share and that of Apple is $50 per share.The price of Microsoft increases to $35 per share after one year and to $40 after two years.Also,shares of Apple increase to $60 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 portfolio return for year 1 is calculated as the percentage increase in the total value of the portfolio from the initial year to the end of year 1. For Microsoft, the increase is from $30 to $35, and for Apple, from $50 to $60. The total initial value is $8000, and the value at the end of year 1 is $9500, giving a return of 18.75%. For year 2, the value increases from $9500 to $11000, giving a return of 15.79%.

The Price of Microsoft Is $30 Per Share and That