Consider a portfolio with three stocks,each with the same value.The three stocks have expected returns of 15%,25%,and 50%.The expected return of this portfolio is
A) 25%.
B) 30%.
C) 50%.
D) 90%.

Question

Quizplus · Accepted Answer

To find the expected return of a portfolio, we need to weigh each stock's expected return by its percentage of the total portfolio value. Since each stock has the same value, we can simply take the average of the expected returns:
(0.15 + 0.25 + 0.5) / 3 = 0.3 or 30%.
Therefore, the best choice is B.

Consider a Portfolio with Three Stocks,each with the Same Value