Question

You own a portfolio that has $2,800 invested in Stock A and $3,250 invested in Stock B. The expected returns on these stocks are 14.7 percent and 9.3 percent, respectively. What is the expected return on the portfolio?
a) 12.06 percent
b) 11.13 percent
c) 11.80 percent
d) 11.41 percent
e) 12.36 percent

Answer 1

Answer:

c) 11.80 percent

Explanation:

Particulars  Amount invested    WTS      Expected return   Portfolio return

Stock A             2,800               0.4628         14.7%                      6.80%

Stock B              3,250              0.5372          9.3%                       5.00%

                          6,050                  1                                                11.80%

WTS

A = 2,800/6050 = 0.4628

B = 3,250/6050 = 0.5372