JoJo's portfolio's return is 12 percent. She is invested in Cisco and IBM which had returns of 15 percent and 9 percent respectively. What percentage of JoJo's assets are invested in each firm?
A) 40 percent in Cisco and 60 percent in IBM
B) 50 percent in Cisco and 50 percent in IBM
C) 30 percent in Cisco and 70 percent in IBM
D) unable to determine with the data provided

Question

Quizplus · Accepted Answer

To find the percentage of JoJo's assets invested in each firm, we can use the weighted average formula for the portfolio's return: $12\% = x\% \times 15\% + (1-x)\% \times 9\%$, where $x$ is the fraction of the portfolio invested in Cisco. Solving for $x$ gives $x = 0.5$ or 50%, meaning 50% is invested in Cisco and the remaining 50% in IBM.

JoJo's Portfolio's Return Is 12 Percent