Answer:
12.5%
Explanation:
A portfolio has $2,800 invested in stock A
$3,900 is invested in stock B
The expected return of stock A is 9%
= 9/100
= 0.09
The expected return of stock B is 15%
= 15/100
= 0.15
The first step is to calculate the total value
= $2,800+$3,900
= $6,700
Therefore, the expected return on the portfolio can be calculated as follows
= (2,800/6,700)×0.09 + (3,900/6,700)×0.15
= 0.4179×0.09 + 0.5820×0.15
= 0.03761 + 0.0873
= 0.1249×100
= 12.5%
Hence the expected return on the portfolio is 12.5%
