Paul has 2 stocks whose portfolio required rate of return is based on the value of $100,000. The correct answer for the portfolio given is 14% rate of return.
<h3>What is a Portfolio?</h3>
A Portfolio is a combination of financial investments.
These investments include various financial instruments such as bonds, stocks, cash or cash equivalents, commodities, futures, swaps, options and other derivatives.
People hire portfolio experts to manage their portfolio on their behalf because they have more knowledge than the owner of that portfolio.
These portfolio managers often charges some fees from their clients for the services they render them.
Investment portfolio are prepared by keeping in view their risk appetite of the clients.
Some clients are risk averse who can accept lesser returns while some clients are risk takers who wants more returns and are ready to accept more risk.
In the given question there are two stocks which has total value of $100,000.
The returns are :
Portfolio A $40,000 , Ra is 20%
Portfolio B $60,000, Rb is 10%
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