You invested $3,000 in a portfolio with an expected return of 10 percent and $2,000 in a portfolio with an expected return of 16 percent. What is the expected return of the combined portfolio?
A) 6.2%
B) 12.4%
C) 13.0%
D) 13.6%

Question

Quizplus · Accepted Answer

The expected return of the combined portfolio is calculated by taking the weighted average of the expected returns of the individual portfolios. For the $3,000 investment with a 10% expected return: ($3,000/$5,000) * 10% = 6%. For the $2,000 investment with a 16% expected return: ($2,000/$5,000) * 16% = 6.4%. Adding these together gives an expected return of 12.4% for the combined portfolio.

You Invested $3,000 in a Portfolio with an Expected Return