If the expected return on Stock 1 is 6%, and the expected return on Stock 2 is 20%, the expected return on a two-asset portfolio that holds 10% of its funds in Stock 1 and 90% in Stock 2 is:
A) 11.52%
B) 13%
C) 18.6%
D) 19.14%

Question

Quizplus · Accepted Answer

The expected return on a two-asset portfolio is calculated by multiplying the expected return of each asset by its weight in the portfolio and then summing these products. For this portfolio: (0.10 * 6%) + (0.90 * 20%) = 0.6% + 18% = 18.6%.

If the Expected Return on Stock 1 Is 6%, and the Expected