Answer: Expected return of the portfolio = 14,70%
Explanation: First we must add the amounts to calculate the total capital:
1000 + 7000 + 6000 + 6000 = $20000
The performance of a portfolio is given by the sum of each individual expected return weighted by its weight in capital.
Therefore we must calculate the weight (w) of each type of action:
W (apple) = 1000 / 20000 = 0,05
W (microsoft) = 7000 / 20000 = 0,35
W (ford) = 6000 / 20000 = 0,30
W (time warner) = 6000 / 20000 = 0,30
Expected return of the portfolio : (0,1050 . 0,05) + (0,1690 . 0,35) + (0,1575 . 0,30) + (0,1180 . 0,30) = 0,14705 = 14,70%
