Question

You own a portfolio of two stocks, a and
b. stock a is valued at $2,000 and has an expected return of 10.5 percent. stock b has an expected return of 14.7 percent. what is the expected return on the portfolio if the portfolio value is $5,000?

Answer 1

Stock a is $2000. Calculate 10.5% of $2000, which equals $210.
Stock b is $3000. Calculate 14.7% of $3000, which is $441.

The expected return on the portfolio is $210 + $441, which equals $651.