Question

You own a portfolio that has $1,720 invested in Stock A and $3,470 invested in Stock B. The expected returns on these stocks are 13.7 percent and 8.0 percent, respectively. What is the expected return on the portfolio

Answer 1

The expected return is 9.8% on the portf

What is the Expected return?

The expected return is the amount of profit or loss an investor can anticipate receiving on an investment.

Calculation of expected return of Portfolio:

Stock A = $1,720 Expected return on Stock A is 13.7% =1,720 x 13.7% =$235.64

Stock B = $3,470 Expected return on Stock B is 8% = 3,470 x 8% =$277.6

Expected portfolio return = returns on each stock divided by incesting value.

    Total return of each stock  = $235.64 + $277.6 = $513.2

     Total Invested value = $1,720 + $3,470 = $5,190

Expected portfolio return = $513.2 divide by $5,190 =9.8%

Thus, the expected return on the portfolio is 9.8%.

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