At the beginning of the year, Ray Fisher decided to take $50,000 in savings out of the

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At the beginning of the year, Ray Fisher decided to take $50,000 in savings out of the bank and invest it in a portfolio of stocks and bonds; $20,000 was placed into common stocks and $30,000 into corporate bonds. A year later, Ray's stock and bond holdings were worth $25,000 and $23,000, respectively. During the year $1,000 in cash dividends was received on the stocks, and $3,000 in coupon payments was received on the bonds. (The stock and bond income was not reinvested in Ray's portfolio.)
a.
What was the return on Ray's stock portfolio during the year?
b. What was the return on Ray's bond portfolio during the year?
c. What was the return on Ray's total portfolio during the year?
Stocks
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing...
Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...
Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...
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Fundamentals of Investments

ISBN: 978-0132926171

3rd edition

Authors: Gordon J. Alexander, William F. Sharpe, Jeffery V. Bailey

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