An investor created an equal weighted portfolio of AMZN, IMB, AAA and DAE on July 1, 2016. These stocks did not pay any dividends during the period in this problem.
The returns on the stocks in July 2016 were 7.6%, -2:1%, 6.8%, and 1.8%, respectively.
(a) What was the portfolio return in July 2016?
The returns on the stocks in August 2016 were 2.4%, -4:8%, 3.1%, 5.2%.
(b) What would be the portfolio return in August 2016 if the portfolio is not rebalanced.
(c) What would be the portfolio return in August 2016 if the portfolio is rebalanced to its weights on July 1, 2016.