The expected return of a portfolio of risky securities
A) is a weighted average of the securities' returns.
B) is the sum of the securities' returns.
C) is the weighted sum of the securities' variances and covariances.
D) is a weighted average of the securities' returns and the weighted sum of the securities' variances and covariances.
E) None of the options are correct.

Question

Quizplus · Accepted Answer

The expected return of a portfolio of risky securities is calculated as a weighted average of the expected returns of the individual securities in the portfolio, where the weights are the proportion of the portfolio's total value that each security represents.

The Expected Return of a Portfolio of Risky Securities