Answer:
The expected return on the portfolio is 15.5%.
Explanation:
The expected return on portfolio formula requires multiplying every asset's weight in the portfolio by their respective expected return, then summing up all values together.
Here,
<em>W</em> = weight of the respective asset
<em>R</em> = expected return of the respective asset
It is provided that:
The expected return on the U.S. stock market is 18%.
The expected return on the Canadian stock market is 13%.
The proportion of money invested in both stock markets is 50%.
Compute the expected return on the portfolio as follows:
Thus, the expected return on the portfolio is 15.5%.