Problem 11-21 Portfolio Returns [LO 1] Series Average return Determine the retur
ID: 2765425 • Letter: P
Question
Problem 11-21 Portfolio Returns [LO 1]
Series
Average return
Determine the return on a portfolio that was equally invested in large-company stocks and long-term corporate bonds. (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)
%
What was the return on a portfolio that was equally invested in small stocks and Treasury bills? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)
Use the following table:Explanation / Answer
1. Portfolio Return = 0.50 * Large stocks Returns + 0.50 * Long-term corporate bonds
= 0.50 * 12.04% + 0.50 * 6.37%
= 6.02% + 3.185%
= 9.205%
2. Portfolio Return = 0.50 * Small stocks Returns + 0.50 * Treasury Bills
= 0.50*16.74 + 0.50 *3.97
= 8.37% + 1.985%
= 10.355%