A portfolio is invested 15 percent in Stock G, 65 percent in Stock J, and 20 per
ID: 3283738 • Letter: A
Question
A portfolio is invested 15 percent in Stock G, 65 percent in Stock J, and 20 percent in Stock K. The expected returns on these stocks are 10 percent, 16 percent, and 24 percent, respectively. What is the portfolio's expected return?
a) 17.54%
b) 13.33%
c) 16.70%
d) 15.86%
e) 17.37%
A portfolio is invested 15 percent in Stock G, 65 percent in Stock J, and 20 percent in Stock K. The expected returns on these stocks are 10 percent, 16 percent, and 24 percent, respectively. What is the portfolio's expected return?
Explanation / Answer
Answer is option C.
Expected return = sum( investment in each stock * expected return from each stock)
= (0.15*10)+(0.65*16)+(0.2*24) = 1.5+10.4+4.8 = 16.7%.