The Price of BHP Is $40 Per Share and That

question 68

Multiple Choice

The price of BHP is $40 per share and that of RIO is $45 per share. The price of BHP increases to $45 per share after one year and to $50 after two years. Also, shares of RIO increase to $50 after one year and to $60 after two years. If your portfolio comprises 100 shares of each security, what is your portfolio return in year 1 and year 2? Assume no dividends are paid.

• A) 9.91%, 17.96%
• B) 11.76%, 15.79%
• C) 10.05%, 18.76%
• D) 11.21%, 14.53%

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Definitions:

TQM

Total Quality Management, a continuous effort by management to improve the quality of products and services through feedback and refinements.

Frederick Taylor

A U.S. mechanical engineer renowned for his efforts to enhance industrial productivity, famously recognized as the progenitor of scientific management.

Productivity

measures how efficiently goods and services are produced by comparing the amount of outputs generated to the inputs used.

Steel Mill

An industrial plant for the manufacture of steel, involving processes like smelting and refining of iron and steel.