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show all your work Question 5 - Portfolio Return [4 points]: Harold Rawlings has computed the returns he camed last year from each of the
show all your work Question 5 - Portfolio Return [4 points]: Harold Rawlings has computed the returns he camed last year from each of the stocks he holds in his portfolio. The individual returns and the amounts he had invested in each stock at the beginning of the year are shown in the following table: Stock Return Amount Invested AT&T 22.5% $4,200 GM 12.3 5,520 Danka -44.7 2,200 Suiza Foods 100.0 3,080 a. Compute the return that Harold earned on his portfolio during the year. b. Harold has decided to keep Danka in his portfolio, even though it has experienced financial difficulties and performed very poorly last year, because he expects a significant turnaround that will generate a 25 percent return next year. Suppose that Harold is correct. Assuming that the retums from the other stocks remain the same as last year, compute the return on the portfolio for next year. (Hint: The portfolio weights for the stocks change based on the retums earned last year, so the values of the stocks at the end of the year should be used to compute the new weights.)
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