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Paper based portfolio return and real portfolio return

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Reference no: EM132596577

An investor wants to buy company X share, which closed the market at $11.50 on Monday. So, on the following day, Tuesday, an investor makes an order to buy 100 shares at $11, but the order expire unfilled and the closing price for that day is $12. On Wednesday, investor make an order again which 100 shares at $12.50. At this time, the order is done for 80 shares at the offer price, $12.50. The investor needs to pay flat rate commission of $10 and on Wednesday, the share price closes at $13. Assume the benchmark price is $11.50 which is Monday closing price.

(1) Calculate paper based portfolio return and real portfolio return.

(2) Calculate implementation shortfall as a fraction of paper based portfolio.

(3) Calculate delay cost, missed trade opportunity cost, realised profit and loss and commission in percentage form.

Reference no: EM132596577

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