Year-to-date, Company O had earned a −2.10 percent return. During the same time period, Company V earned 8.00 percent and Company M earned 6.25 percent. If you have a portfolio made up of 40 percent Company O, 30 percent Company V, and 30 percent Company M, what is your portfolio return?
A) 3.435 percent
B) 5.115 percent
C) 12.15 percent
D) 16.35 percent

Question

Quizplus · Accepted Answer

The portfolio return can be calculated by multiplying each company's return by its respective weight in the portfolio and then summing these products. For Company O: $0.40 \times (-2.10\%) = -0.84\%$, for Company V: $0.30 \times 8.00\% = 2.40\%$, and for Company M: $0.30 \times 6.25\% = 1.875\%$. Adding these together gives $-0.84\% + 2.40\% + 1.875\% = 3.435\%$.

Year-To-Date, Company O Had Earned a −2