The actual or expected return on a portfolio is equal to:
A)the average of the returns on the stocks in the portfolio weighted by the dollar amounts invested in each stock
B)the simple average of the returns on the stocks in the portfolio plus the risk-free rate of return.
C)the sum of the products of the anticipated returns.
D)the simple average of returns on the stocks in the portfolio less the risk-free rate of return.

Question

Quizplus · Accepted Answer

The actual or expected return on a portfolio is the weighted average of the returns on the stocks in the portfolio. Each stock's return is multiplied by the proportion of the portfolio invested in that stock, and the resulting values are summed. This gives a more accurate measure of return than a simple average, as it takes into account the relative size of each investment in the portfolio.

The Actual or Expected Return on a Portfolio Is Equal