You own a portfolio that is 34 percent invested in Stock X, 49 percent in Stock

Question

You own a portfolio that is 34 percent invested in Stock X, 49 percent in Stock Y, and 17 percent in Stock Z. The expected returns on these three stocks are 8 percent, 11 percent, and 13 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).)

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).)

Explanation / Answer

Hi,

Please find the detailed answer as follows:

Expected Portfolio Return = % Investment in Stock X*Rate of Return on Stock X + % Investment in Stock Y*Rate of Return on Stock Y + % Investment in Stock Z*Rate of Return on Stock Z = .34*8 + .49*11 + .17*13 = 10.32%

Answer is 10.32%.

Thanks.

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