Math Problem page 18
Wendell invests $10,000 in a stock portfolio made up of Petroleum Special at $30 per share, Newshoe at $12 per share, and Beans and Sprouts at $2.50 per share. He places 60 percent of the money in P.S. (Petroleum Special), 30 percent in N (Newshoe), and 10 percent in B & S (beans and Sprouts). With market values changing (P.S. down $3.12, N up 80 percent, and B & S up $0.20), what is his portfolio worth 6 months later?
The word problem is included in the book: Basic Biomechanics, 6th edition
by Susan J. Hall;
ISBN#978-0-07-337644-8
The course name: Biomechanics
To calculate Wendell's portfolio worth 6 months later, we need to determine the current market value of each stock and multiply it by the percentage of money invested in each stock. Then, we sum these values to get the total portfolio worth.
Let's break down the steps:
Step 1: Calculate the current market value of each stock:
- Petroleum Special (P.S.): Current price per share = $30 - $3.12 decrease = $26.88
- Newshoe (N): Current price per share = $12 + (80% increase * $12) = $21.60
- Beans and Sprouts (B & S): Current price per share = $2.50 + $0.20 increase = $2.70
Step 2: Determine the amount invested in each stock:
- P.S.: 60% of $10,000 = $6,000
- N: 30% of $10,000 = $3,000
- B & S: 10% of $10,000 = $1,000
Step 3: Calculate the value of each stock in the portfolio:
- P.S. value = $26.88 * $6,000 / $30 per share = $5,376
- N value = $21.60 * $3,000 / $12 per share = $5,400 (Note: As the stock has increased by 80%, we need to multiply by the current percentage increase, which is 1.80)
- B & S value = $2.70 * $1,000 / $2.50 per share = $1,080
Step 4: Sum the values of each stock to get the final portfolio worth:
- Portfolio worth = P.S. value + N value + B & S value = $5,376 + $5,400 + $1,080 = $11,856
Therefore, Wendell's portfolio is worth $11,856 six months later based on the given information.