1. You are considering how to invest part of your retirement savings. You have decided to put $600,000 into three stocks: 67% of the money in GoldFinger (currently $15/share), 22% of the money in Moosehead (currently $85/share), and the remainder in Venture Associates (currently $7/share). Suppose GoldFinger stock goes up to $30/share, Moosehead stock drops to $55/share, and Venture Associates stock rises to $20 per share.

a. What is the new value of the portfolio?

b. What return did the portfolio earn?

2. You want to invest $50,000 in a portfolio with a beta of no more than 1.5 and an expected return of 14%. Bay Corp. has a beta of 0.9 and an expected return of 10.4%, and City Inc. has a beta of 1.9 and an expected return of 16.4%. The risk-free rate is 5%. Is it possible to create this portfolio investing in Bay Corp. and City Inc.? If so, how much will you invest in each?

If you don't buy or sell any shares after the price change, what are your new portfolio weights?

It is possible to create the portfolio by investing ______ in Bay Corp. and ________ in City Inc.