Your portfolio consists of two assets X and Y. Asset X is 40% of your holdings and has an expected return of 10% and asset Y is 60% of your holdings and has an expected return of 8%. What is the expected return for your portfolio?
A) 9%
B) 8.8%
C) 8.75%
D) 8.4%

Question

Quizplus · Accepted Answer

The expected return for the portfolio can be calculated by multiplying the expected return of each asset by its weight in the portfolio and then summing these products. For asset X, this is 0.4 * 10% = 4%, and for asset Y, this is 0.6 * 8% = 4.8%. Adding these together gives a total expected return of 8.8% for the portfolio.

Your Portfolio Consists of Two Assets X and Y