FIN 4306: Series 1 Exercise 1 An investor has $10000 then decides to construct the following portfolio Stock Position Price Number of shares A Long $100 750 B Long $75 800 C Short $230 250 D Short $140 300 1) How much cash does the investor have after building the portfolio 2) Calculate the weight of each security in the portfolio 3) In one year, the prices of the securities are as follows Security Stock A Stock B Stock C Stock D Price $85 $80 $240 $170 The investor decides to close all positions, a) How much cash will he she have after closing all positions assuming that an invested/borrowed at the risk free rate of 3.5%? b) Calculate the rate of return of the investor. Exercise 2 Stocks A and B have the following historical prices Year Stock A Stock B 2008 140 71 2009 109 87 2010 123 85 2011 133 88 2012 128 83 2013 107 81 2014 116 81 2015 118 83