You have $. You put % of your money in a stock with an expected return of %, $ in a stock with an expected return of %, and

Question

3 years ago

14

the rest in a stock with an expected return of %. What is the expected return of your portfolio?

1 answer:

SCORPION-xisa [38] · Answer 1 · 2022-03-06T05:48:24+03:00

Answer: 16.26%

Explanation:

The expected return is the weighted average of the returns of the constituent stocks in the portfolio.

Weights.

Stock A = 20%

Stock B

= 30,000/70,000

= 0.4286

Stock C

= 70,000 - 30,000 - (20% * 70,000)

= 70,000 - 30,000 - 14,000

= $26,000

= 26,000/70,000

= 0.3714

Expected return = ( 0.2 * 12%) + ( 0.4286* 15%) + ( 0.3714 * 20%)

= 0.024 + 0.06429‬ + 0.07428‬

= 0.16257‬

= 16.26%

You have ​$. You put ​% of your money in a stock with an expected return of ​%, ​$ in a stock with an expected return of ​%, and