You own a portfolio that is 35 percent invested in Stock X, 20 percent in Stock

Question

You own a portfolio that is 35 percent invested in Stock X, 20 percent in Stock Y, and 45 percent in Stock Z. The expected returns on these three stocks are 8 percent, 19 percent, and 15 percent, respectively. What is the expected return on the portfolio? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

You own a portfolio that is 35 percent invested in Stock X, 20 percent in Stock Y, and 45 percent in Stock Z. The expected returns on these three stocks are 8 percent, 19 percent, and 15 percent, respectively. What is the expected return on the portfolio? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Explanation / Answer

Expected return on the portfolio = Weight of Stock x * expected return of Stock x + Weight of Stock Y* expected return of Stock Y + Weight of Stock Z * expected return of Stock Z

Expected return on the portfolio = 35%*8 + 20%*19 + 45%*15

Expected return on the portfolio = 13.35 %

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