Question

stock a has an expected return of 20%; stock b has an expected return of 5%, what is the ecpected return on a portfolio is comprised of 67% of stock a and 33% of stock b

Answer 1

Answer: 15.05%

Explanation:

Expected return is a weighted average of the individual returns of the composite stocks;

= (weight of A * return on A) + (weight on B * return on B)

= (67% * 20%) + (33% * 5%)

= 15.05%