P13-3 Portfolio Expected Return [LO1] You own a portfolio that is 60 percent inv

Question

P13-3 Portfolio Expected Return [LO1]

You own a portfolio that is 60 percent invested in Stock X, 25 percent in Stock Y, and 15 percent in Stock Z. The expected returns on these three stocks are 9 percent, 17 percent, and 13 percent, respectively. The expected return on the portfolio is percent. (Do not include the percent sign (%). Round your answer to 2 decimal places. (e.g., 32.16))

You own a portfolio that is 60 percent invested in Stock X, 25 percent in Stock Y, and 15 percent in Stock Z. The expected returns on these three stocks are 9 percent, 17 percent, and 13 percent, respectively. The expected return on the portfolio is percent. (Do not include the percent sign (%). Round your answer to 2 decimal places. (e.g., 32.16))

Explanation / Answer

The expected return of a portfolio is the sum of the weight of each asset times the expected return of

each asset. So, the expected return of the portfolio is:

E(Rp) = .60(.09) + .25(.17) + .15(.13) = .1160 or 11.60%

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.