Question
The following table gives the adjusted closing prices (adjusted for dividend payments) for the IBM and Bank of America common stocks in the beginning of
The following table gives the adjusted closing prices (adjusted for dividend payments) for the IBM and Bank of America common stocks in the beginning of 2012 and at the end of 2017.
| IBM | Bank of America |
Price in the Beginning of 2012 ($) | $ 102 | $ 25 |
Price at the end of 2017 ($) | $ 96 | $ 52 |
Assume that you have invested $1,000 at the beginning of 2012 in these stocks as follows: $250 in IBM, $750 in Bank of America. (Note: We are assuming that you are able to buy fractions of a given stock, and there are no transaction costs associated with your trading activity in order to simplify the calculations.)
What would the % expected rate of return (E(r) %) on this portfolio be over the investment period? (Do not round your intermediate answers. Round your final % answer up to two decimal places without the % sign).
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