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16 October, 07:35

Year-to-date, Oracle had earned a - 1.34 percent return. During the same time period, Valero Energy earned 7.96 percent and McDonald's earned 0.88 percent. If you have a portfolio made up of 30 percent Oracle, 25 percent Valero Energy, and 45 percent McDonald's, what is your portfolio return?

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  1. 16 October, 08:44
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    The portfolio return is 1.984%

    Explanation:

    The portfolio return is the weighted average of the returns of individual stocks that form up the portfolio. The portfolio return is calculated as follows,

    Portfolio Return = wA * rA + wB * rB + ... + wN * rN

    Where,

    w represents the weight of each stock in the portfolio r represents the return of each stock

    Portfolio return = 0.3 * - 1.34% + 0.25 * 7.96% + 0.45 * 0.88%

    Portfolio return = 1.984% or 0.01984
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