What is the expected return on a portfolio that is invested 30% in stock A and 70% in stock B, given the following information?
A) 5.28%
B) 6.60%
C) 7.16%
D) 7.43%
E) 7.90%

Question

What is the expected return on a portfolio that is invested 30% in stock A and 70% in stock B, given the following information? 
A) 5.28% 
B) 6.60% 
C) 7.16% 
D) 7.43% 
E) 7.90%

Quizplus · Accepted Answer

Using the formula for expected return of a portfolio:
expected return = (weight of stock A x expected return of stock A) + (weight of stock B x expected return of stock B)
= (0.3 x 0.10) + (0.7 x 0.09)
= 0.03 + 0.063
= 0.093 or 9.3%
Therefore, the expected return on the portfolio is 7.16%.

What Is the Expected Return on a Portfolio That Is