The Price of Microsoft Is $37 Per Share and That

question 19

Multiple Choice

The price of Microsoft is $37 per share and that of Apple is $43 per share. The price of Microsoft increases to $42 per share after one year and to $47 after two years. Also, shares of Apple increase to $49 after one year and to $59 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) 13.06%, 14.84%
• B) 10.31%, 18.96%
• C) 13.75%, 16.48%
• D) 11.69%, 19.78%

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Definitions:

Insurance Company

A financial institution that provides a range of insurance policies to protect individuals and businesses against the risk of financial losses in return for premium payments.

Economic Loss

Financial damage suffered by a person or entity, often due to breach of contract, negligence, or external market factors.

Insurance

A contract whereby one party pays premiums to another party who undertakes to pay compensation for losses resulting from risks or perils specified in the contract.

Insured

A person or entity covered under an insurance policy, receiving protection against specified losses or damages in exchange for payment of a premium.