The expected return on a portfolio considers which of the following factors?
I. Percentage of the portfolio invested in each individual security
II. Projected states of the economy
III. The performance of each security given various economic states
IV. Probability of occurrence for each state of the economy
A) I and III only
B) II and IV only
C) I, III, and IV only
D) II, III, and IV only
E) I, II, III, and IV

Question

Quizplus · Accepted Answer

The expected return on a portfolio takes into account all these factors: the percentage of the portfolio invested in each security (I), the different projected states of the economy and how they might affect the portfolio (II), the performance of each security within these various economic states (III), and the probability of each state occurring (IV). These elements together help in calculating the expected return by considering the weighted average of possible outcomes, where the weights are the probabilities of each state.

The Expected Return on a Portfolio Considers Which of the Following