Question

You own a portfolio that is 30 percent invested in Stock X, 20 percent in Stock Y, and 50 percent in Stock Z. The expected returns on these three stocks are 9 percent, 15 percent, and 11 percent, respectively. What is the expected return on the portfolio

Answer 1

Answer:

Expected return on portfolio = Rp = 11.20 %

Explanation:

Rp = (WX * RX) +( WY *RY) + (WZ * RZ )

Rp : Return on portfolio

WX :  Weight of Stock X

RX: Rate of return of Stock X

WY :  Weight of Stock Y

RY: Rate of return of Stock Y

WZ :  Weight of Stock Z

RZ: Rate of return of Stock Z

                           Rp  = (30% x 9%) + ( 20% x 15 %) + (50 % x 11%)

                            Rp = 11.20 %