Fremont Enterprises has an expected return of 18 % and Laurelhurst News has an expected return of 21 %. If you put 43 % of your portfolio in Laurelhurst and 57 % in Fremont, what is the expected return of your portfolio? g

Question

Business

Brynn Pierce

17 February, 13:14

Fremont Enterprises has an expected return of 18 % and Laurelhurst News has an expected return of 21 %. If you put 43 % of your portfolio in Laurelhurst and 57 % in Fremont, what is the expected return of your portfolio? g

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Answers (1)

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Carla Ross · Answer 1

Answer: 19.29%

Explanation:

From the question, Fremont Enterprises has an expected return of 18% and 57% of the portfolio is put in Fremont. The portfolio return of Fremont will be the expected return multiplied by the weight. This will be:

= 18% * 57%

= 18 * 0.57

= 10.26%

We are also told that Laurelhurst News has an expected return of 21% and that 43% of the portfolio is put in Laurelhurst News. The portfolio return here will be the expected return multiplied by the weight. This will be:

= 21% * 43%

= 21% * 0.43

= 9.03%

The the expected return of the portfolio will now be:

= 10.26% + 9.03%

= 19.29%