A portfolio is made up of four stocks: $\begin{array}{lll}
& \begin{array}{l}
\text { Expected } \
\text { Return }
\end{array} & \begin{array}{l}
\text { Amount } \
\text { Invested }
\end{array} \
\text { Stock A } & 16 \% & \$ 100,000 \
\text { Stock B } & 12 \% & \$ 200,000 \
\text { Stock C } & 18 \% & \$ 200,000 \
\text { Stock D } & 20 \% & \$ 100,000
\end{array}$ The expected return of the portfolio is:
A) 16.50%.
B) 16.00%.
C) 13.20%.
D) None of the above

Question

A portfolio is made up of four stocks: $\begin{array}{lll} 
& \begin{array}{l}
\text { Expected } \
\text { Return }
\end{array} & \begin{array}{l}
\text { Amount } \
\text { Invested }
\end{array} \
\text { Stock A } & 16 \% & \$ 100,000 \
\text { Stock B } & 12 \% & \$ 200,000 \
\text { Stock C } & 18 \% & \$ 200,000 \
\text { Stock D } & 20 \% & \$ 100,000
\end{array}$ The expected return of the portfolio is:
A) 16.50%.
B) 16.00%.
C) 13.20%.
D) None of the above

Quizplus · Accepted Answer

The expected return of the portfolio is the weighted average of the expected returns of the individual stocks, where the weights are the proportions of the portfolio invested in each stock. In this case, the expected return of the portfolio is:(0.25 * 16%) + (0.50 * 12%) + (0.25 * 18%) = 16%

A Portfolio Is Made Up of Four Stocks The Expected Return of the Portfolio Is: A) 16

A Portfolio Is Made Up of Four Stocks The Expected Return of the Portfolio Is:
A) 16