Suppose you invest in 100 shares of Harley-Davidson (HOG) at $40 per share and 230 shares of Yahoo (YHOO) at $25 per share. If the price of Harley-Davidson increases to $50 and the price of Yahoo decreases to $20 per share, what is the return on your portfolio?

Question

Quizplus · Accepted Answer

A) Compute value of HOG stock (stock price times number of shares) and the value of YHOO stock. Add values of both to compute portfolio value. Repeat with new price of stocks. Divide new portfolio value by old portfolio value and subtract 1 to compute return.
Initial portfolio value = 100 × $40 + 230 × $25 = $9750;
final portfolio value = 100 × $50 + 230 × $20 = $9600;
hence portfolio return = $9600 / $9750 - 1 = -1.54%.

Suppose You Invest in 100 Shares of Harley-Davidson (HOG) at $40