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What you will learn
- Calculate a holding's value as share count times price.
- Distinguish share holdings from unused money in a practice account.
- Explain how one price change affects the account's total value.
Share count and holding value are different measures
If you have 20 shares in a fictional company and each costs SEK 100, the holding is worth SEK 2,000. When the price changes, you still have 20 shares, as long as you make no trade and no corporate event changes the number of shares.
The number of different companies does not tell you how the money is distributed either. Two portfolios with two companies can be very different: almost all the value may sit in one company in the first, while the second has a more even allocation. The next step is to calculate each holding's share of the total.
An example with two companies and virtual money
This invented exercise has two share holdings and an unused balance. Company A and Company B do not represent real stocks. The prices are chosen to make the calculation clear. We leave out fees, taxes and dividends. All amounts are expressed in Swedish kronor, labelled SEK.
The share holdings together are worth SEK 5,000. Including the unused SEK 5,000 of virtual money makes the whole practice account worth SEK 10,000. State which of these totals you mean when discussing portfolio value.
If the table does not fit, scroll it sideways.
| Part | Calculation | Value |
|---|---|---|
| Company A | 20 × SEK 100 | SEK 2,000 |
| Company B | 30 × SEK 100 | SEK 3,000 |
| Unused virtual money | Unchanged balance | SEK 5,000 |
| Whole practice account | 2,000 + 3,000 + 5,000 | SEK 10,000 |
What happens if one holding falls 20 percent?
Suppose Company A's price falls from SEK 100 to SEK 80. Its holding becomes 20 × 80 = SEK 1,600. Company B and the virtual-money balance stay unchanged in this particular scenario.
The whole practice account becomes 1,600 + 3,000 + 5,000 = SEK 9,600. The reduction is SEK 400, or 4 percent of the starting SEK 10,000. Company A fell 20 percent, but it was only one part of the account. The whole account therefore did not fall by the same percentage.
This is a calculation under stated assumptions, not a prediction of how a real portfolio will develop. Every holding could change at the same time, and a different allocation would produce a different result.
A list of company names does not explain the risk
Finansinspektionen explains that shares involve risk and discusses spreading exposure across companies, industries and markets. In an exercise, you can investigate this by asking which holdings would be affected by the same imagined event.
Write down both what each company does and why you chose the allocation. Recording only the best-performing holding makes it difficult to distinguish a well-supported explanation from luck. A clear starting table also makes comparison with a later table possible.
- Record the date, currency and price used in the exercise.
- Calculate every holding before adding the total.
- State whether unused money is included in the total.
- Separate deposits from changes in investment value.
Try it yourself
A fictional account contains ten shares at SEK 200 each, 25 shares at SEK 80 each, and SEK 1,000 of unused virtual money. What is the whole account worth?
Show the solution and explanation
SEK 5,000.
The first holding is 10 × 200 = SEK 2,000 and the second is 25 × 80 = SEK 2,000. Add the unused SEK 1,000: 2,000 + 2,000 + 1,000 = SEK 5,000. Adding share counts alone does not give a monetary value.
Check your understanding
Are two holdings with the same share count always worth the same amount?
No. Value also depends on price per share. Ten shares at SEK 50 are worth SEK 500; ten at SEK 100 are worth SEK 1,000.
Is a new deposit the same as a return?
No. A deposit adds money to the account. A price change alters the value of the holdings already there. Keep them separate when describing performance.
Practise with virtual money
Try what you just learned in a practice portfolio with virtual money. You don't deposit any real money.
How the practice portfolio worksKeep learning and practising
More lessons on this topic
Start here: shares and portfolios
Sources and examples
- Finansinspektionen: shares, risk and checking sources (in Swedish)
- Handelsbanken: portfolios and different types of risk (in Swedish)
The sources support the factual explanations. Calculations and exercises were created for this lesson. Amounts and price changes are invented unless stated otherwise.
This material is educational and does not recommend securities to buy. A simulated result does not guarantee a future result.
