Question
Use the following information to answer the next two questions. Number of shares Closing Prices Company outstanding (Year T) Year T Year T + 1
Use the following information to answer the next two questions.
| Number of shares | Closing Prices | ||
| Company | outstanding (Year T) | Year T | Year T + 1 |
| A | 10,000 | $70.00 | $67.00 |
| B | 6,000 | 25.00 | 22.00 |
| C | 15,000 | 50.00 | 63.00 |
| D | 12,000 | 12.00 | 36.00 |
Stock D had a 1:4 reverse split the day after the year T price listed above. Suppose that you create an equally weighted portfolio consisting of these stocks.
1. Using arithemetic averages, find the percentage change in your portfolio from year T to T+1.
2. Assume you invested $3,000 in each of the four stocks in the previous question in year T. Find the value of your portfolio in year T+1 using geometric returns. Round your final answer to two decimals. Do not use the dollar sign when entering your answer.
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Personal Finance
Authors: Richard Stanton
2nd Edition
1519662106, 978-1519662101
