Your portfolio consists of Microsoft and Google. On September 15, you fully invested your $1,000 on these two stocks with 50% of your money going into Microsoft (purchase price = $25 per share) and Google was purchased at $500 per share. On November 8, you sold your Microsoft at $29 a share and Google at $485 a share. Assume there is no cost to buy stocks but there is a $20 total commission charge to sell a stock up to 2500 shares. Compute this portfolio's rate of return for the period and annualize the return. Why is it necessary to compare your portfolio's performance against a certain index?

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To compute the portfolios rate of return we need to calculate the total investment the total proceed... View the full answer