What is the expected return on this portfolio?
A)11.48 percent
B)11.92 percent
C)13.03 percent
D)13.42 percent
E)13.97 percent

Question

What is the expected return on this portfolio? 
A)11.48 percent 
B)11.92 percent 
C)13.03 percent 
D)13.42 percent 
E)13.97 percent

Quizplus · Accepted Answer

Portfolio value = (300 F1F1F1S1F1F1F10 $28) + (500 F1F1F1S1F1F1F10 $10) + (600 F1F1F1S1F1F1F10 $13) = $8,400 + $5,000 + $7,800 = $21,200; E(r) = ($8,400/$21,200) (0.12) + ($5,000/$21,200) (0.07) + ($7,800/$21,200) (0.15) = 11.92 percent

What Is the Expected Return on This Portfolio