You own a portfolio that has $2,800 invested in Stock A and $3,900 invested in S

Question

You own a portfolio that has $2,800 invested in Stock A and $3,900 invested in Stock B. Assume the expected returns on these stocks are 9 percent and 15 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 has $2,800 invested in Stock A and $3,900 invested in Stock B. Assume the expected returns on these stocks are 9 percent and 15 percent, respectively.

Explanation / Answer

Answer: Calculation of the expected return on the portfolio:

Erp=9%($2800/$6700)+15%*($3900/$6700)

=3.761%+8.731%

=12.49%

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