What is the expected return on a portfolio which is invested 35% in stock A, 45% in stock B, and 20% in stock C?
A) 8.98%
B) 9.01%
C) 9.42%
D) 9.80%
E) 10.53%

Question

What is the expected return on a portfolio which is invested 35% in stock A, 45% in stock B, and 20% in stock C? 
A) 8.98% 
B) 9.01% 
C) 9.42% 
D) 9.80% 
E) 10.53%

Quizplus · Accepted Answer

To calculate the expected return on a portfolio, we need to take the weighted average of the expected returns of each stock. Using the given percentages and expected returns for each stock, we get:

Expected return on portfolio = (0.35 x 0.12) + (0.45 x 0.10) + (0.20 x 0.08) = 0.042 + 0.045 + 0.016 = 0.103 or 10.3%

Therefore, the closest answer choice is D) 9.80%.

What Is the Expected Return on a Portfolio Which Is