These exercises demonstrate the application of various investment concepts and techniques, including present value, future value, return on investment, and portfolio management. By understanding these concepts, investors can make informed decisions and achieve their financial goals.
Using the portfolio return formula:
ROI = ($370 - $300) / $300 = $70 / $300 = 0.2333 or 23.33%
Expected Return = (Weight of Stock A x Return of Stock A) + (Weight of Stock B x Return of Stock B) Ushtrime Te Zgjidhura Investime
PV = FV / (1 + r)^n
What is the present value of an investment that will pay $1,000 in 5 years, if the discount rate is 10% per annum?
What is the expected return of the portfolio? What is the expected return of the portfolio
Where: PV = present value FV = future value = $1,000 r = discount rate = 10% = 0.10 n = number of years = 5
Stock A: 40% of the portfolio, with an expected return of 12% Stock B: 60% of the portfolio, with an expected return of 15%
FV = $500 x (1 + 0.08)^3 = $500 x 1.25971 = $629.86 including present value
You have a portfolio with two stocks:
Using the future value formula:
Using the ROI formula:
Expected Return = (0.40 x 0.12) + (0.60 x 0.15) = 0.048 + 0.09 = 0.138 or 13.8%
ROI = (Total Cash Flows - Initial Investment) / Initial Investment