You own the following portfolio of stocks that have achieved the following returns.

The weighted average return is
A)approximately 4.33 percent.
B)approximately 4.10 percent.
C)approximately 2.33 percent.
D)approximately 33 percent.

Question

You own the following portfolio of stocks that have achieved the following returns.

The weighted average return is
A)approximately 4.33 percent. 
B)approximately 4.10 percent. 
C)approximately 2.33 percent. 
D)approximately 33 percent.

Quizplus · Accepted Answer

To calculate the weighted average return, we need to multiply each stock's return by its weight (percentage of the total portfolio value) and then sum up the results.

Weighted average return = (0.40 x 0.06) + (0.30 x 0.02) + (0.20 x 0.03) + (0.10 x 0.10)
= 0.024 + 0.006 + 0.006 + 0.010
= 0.046 or 4.6%

Therefore, the best answer is B, approximately 4.10 percent.

You Own the Following Portfolio of Stocks That Have Achieved