Year-to-date, Yum Brands had earned a 3.80 percent return. During the same time period, Raytheon earned 4.26 percent and Coca-Cola earned - 0.46 percent. If you have a portfolio made up of 30 percent Yum Brands, 30 percent Raytheon, and 40 percent Coca-Cola, what is your portfolio return?

The portfolio return is 2.234%

Explanation:

The portfolio return is a function of the weighted average of individual stock returns that form up the portfolio.

The portfolio return can be calculated as follows,

return of Portfolio = wA * rA + wB * rB + ... + wN * rN

Where,

w represents the weighatge of investment in a stock as a proportion of total investment in portfolio r is the return of the stock

Return of portfolio = 0.038 * 0.3 + 0.0426 * 0.3 + (-0.0046) * 0.4

Return of Portfolio = 0.02234 or 2.234%