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5 November, 14:50

You own a portfolio that is 30 percent invested in Stock X, 20 percent in Stock Y, and 50 percent in Stock Z. The expected returns on these three stocks are 9 percent, 15 percent, and 11 percent, respectively. What is the expected return on the portfolio

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  1. 5 November, 16:17
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    Expected return on portfolio = Rp = 11.20 %

    Explanation:

    Rp = (WX * RX) + (WY * RY) + (WZ * RZ)

    Rp : Return on portfolio

    WX : Weight of Stock X

    RX: Rate of return of Stock X

    WY : Weight of Stock Y

    RY: Rate of return of Stock Y

    WZ : Weight of Stock Z

    RZ: Rate of return of Stock Z

    Rp = (30% x 9%) + (20% x 15 %) + (50 % x 11%)

    Rp = 11.20 %
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