You own a portfolio that has $2,000 invested in Stock A and $3,000 invested in Stock B. If the expected returns on these stocks are 9 percent and 12 percent, respectively, what is the expected return on the portfolio? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e. g., 32.16.)

Question

Business

Bianca Pineda

28 August, 08:01

You own a portfolio that has $2,000 invested in Stock A and $3,000 invested in Stock B. If the expected returns on these stocks are 9 percent and 12 percent, respectively, what is the expected return on the portfolio? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e. g., 32.16.)

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Answers (1)

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Kelvin Mosley · Answer 1

10.8%

Explanation:

Given that,

Investment in Stock A = $2,000

Investment in Stock B = $3,000

Expected return on Stock A = 9%

Expected return on Stock B = 12%

Expected return on the portfolio:

= [ (Investment in Stock A * Expected return) + (Investment in Stock B * Expected return) ] : Total investment in Stock A and B

= [ ($2,000 * 9%) + ($3,000 * 12%) ] : ($2,000 + $3,000)

= ($180 + $360) : $5,000

= $540 : $5,000

= 0.108 or 10.8%