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Suppose you invest $20 000 by purchasing 400 shares of BHP Billiton (BHP)at $13 per share, 500 shares of ANZ Bank (ANZ)at $20 per share, and 200 shares of Flight Centre (FLT)at $24 per share.
-Suppose over the next year BHP has a return of 12.5%, ANZ has a return of 20%, and FLT has a return of -10%. The value of your portfolio over the year is:

Question

Quizplus · Accepted Answer

We can calculate the value of each stock after one year as:
- BHP: $13 x 1.125 = $14.63 per share
- ANZ: $20 x 1.2 = $24 per share
- FLT: $24 x 0.9 = $21.60 per share (note the negative return is accounted for by multiplying by 0.9 instead of adding)
Thus the value of your portfolio would be:
(400 x $14.63) + (500 x $24) + (200 x $21.60) = $5,852 + $12,000 + $4,320 = $22,172
This is closest to answer choice C, $22,170. Therefore, the best choice is C.

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