The following information regarding a portfolio of two stocks are given: w₁ = .25,w₂ = .75,E(R₁)= .08,and E(R₂)= .15.Which of the following regarding the portfolio expected return,E(R_p),is correct? A) .3640 B) .2300 C) .1325 D) .1699

Question

Quizplus · Accepted Answer

The expected return of a portfolio is calculated as the weighted sum of the expected returns of the individual assets. E(Rp) = w1 * E(R1) + w2 * E(R2) = 0.25 * 0.08 + 0.75 * 0.15 = 0.1325.

The Following Information Regarding a Portfolio of Two Stocks Are