Checked Portfolio Gain and Risk Test 4 Historical Stock Returns Year Stock #1 Stock #2 1 -0.176 -0.362 0.137 0.282 -0.075 -0.154 0.139 0.286 0.106 0.218 Suppose you invest $1,000 in two stocks, as follows: Stock # 1 $ 650.00 Stock #2 350.00 Notice that the "weight" of dollars invested in stock #1 is 65.0%% Notice that the "weight" of dollars invested in stock #2 is 35.0% At the end of the first year: The $650 earned -17.6%, (so ending value was $535.60) The $350 earned -36.2%, (so ending value was $223.30) The portfolio value was worth $ 758.90 At the beginning of the second year, you re-arrange your invested dollars so that the weights are the same as they were originally, For instance, you invest ($758.9000) (0.6500) = $493.2850 in stock 1, and and $265.6150 in stock 2. You continue this process for all five years (computing ending values for each stock and the portfolio, then re-balancing, then finding the new values using that year's returns from the chart above)