A portfolio has 40% of its funds invested in Security C and 60% of its funds invested in Security D.Security C has an expected return of 6%.Security D has an expected return of 12%.What is the expected return of the portfolio?
A)6.0%
B)7.5%
C)9.6%
D)10.2%
E)12.0%

Question

Quizplus · Accepted Answer

The expected return of the portfolio is calculated as the weighted average of the expected returns of Security C and Security D, where the weights are the proportions of funds invested in each security. 
Expected return of the portfolio = (0.4 × 6%) + (0.6 × 12%) = 2.4% + 7.2% = 9.6%. 
Therefore, the expected return of the portfolio is 9.6%, which is option C.

A Portfolio Has 40% of Its Funds Invested in Security