IIf an investor invests 50% in IBM which returned 20%; 30% in Texaco which returned –10%; and 20% in Motorola which returned 5%, what is the portfolio rate of return?
A) 14%
B) 8%
C) 8.45%
D) 9.11%

Question

Quizplus · Accepted Answer

The portfolio rate of return can be calculated by multiplying each investment's return by its weight in the portfolio and then summing these products. For IBM: 50% * 20% = 10%, for Texaco: 30% * (-10%) = -3%, and for Motorola: 20% * 5% = 1%. Adding these together gives a total portfolio return of 10% - 3% + 1% = 8%.

IIf an Investor Invests 50% in IBM Which Returned 20%;