You own a portfolio that is 16 percent invested in Stock X, 31 percent in Stock

Question

You own a portfolio that is 16 percent invested in Stock X, 31 percent in Stock Y, and 53 percent in Stock Z. The expected returns on these three stocks are 9 percent, 12 percent, and 14 percent, respectively.

What is the expected return on the portfolio? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

You own a portfolio that is 16 percent invested in Stock X, 31 percent in Stock Y, and 53 percent in Stock Z. The expected returns on these three stocks are 9 percent, 12 percent, and 14 percent, respectively.

Explanation / Answer

Expected Return Of the Portfolio = Expected return on Stock-X*Weight of Investment in Stock-X + Expected return on Stock-Y*Weight of Investment in Stock-Y + Expected return on Stock-Z*Weight of Investment in Stock-Z

= (9*0.16) + (12*0.31) + (14*0.53)

= 12.58%

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