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Sholpan [36]
3 years ago
8

You own a portfolio that has $3,300 invested in Stock A and $4,400 invested in Stock B. Assume the expected returns on these sto

cks are 9 percent and 15 percent, respectively. What is the expected return on the portfolio
Business
1 answer:
Anton [14]3 years ago
5 0

Answer:

12.42%

Explanation:

Expected return on a portfolio is the sum of the products of weight in the portfolio and expected return of all the investment in the portfolio.

To estimate the expected return on the portfolio, the following calculation are done first:

Total amount invested = Amount invested in Stock A + Amount invested in Stock A = $3,300 + $4,400 = $7,700

Weight of a Stock in a portfolio = Amount invested in the Stock / Total amount invested

Therefore, we have:

WA = Weight of Stock A in the portfolio = $3,300 / $7,700 = 0.43, or 43%

WB = Weight of Stock B in the portfolio = $4,400 / $7,700 = 0.57, or 57%

EA = Expected returns on stock A = 9%

EB = Expected returns on stock A = 15%

Therefore,

Expected return on the portfolio = (WA * EA) + (WB * EB) = (43% * 9%) + (57% * 15%) = 12.42%

Therefore, the expected return on the portfolio is 12.42%.

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Answer:

<h2>           Rembrandt Paint Company</h2><h2>Income Statement - December 31, 2021</h2>

Sales revenues                                                        $24,000,000

- Cost of goods sold                                              <u> ($13,500,000)</u>

Gross margin                                                           $10,500,000

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Income from operations                                          $8,620,000

Other revenue and expenses:

Gain on sales of assets                   $3,200,000  

Interest revenue                                 $220,000

Loss from discontinued oper.       ($2,200,000)

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Total other revenue and expenses                             <u>$800,000</u>

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Income taxes (25%)                                                  <u>($2,355,000)</u>

Net income after taxes                                             $7,065,000

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Earnings per share (EPS)                                                    $11.78

   

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