Your grandparents give you $1,000 as a graduation gift; you decide to save 25% in bonds and 75% in Ford stock. If the return to the bonds is 3% and the return to Ford is -5%, then your overall return on wealth would be about:

Question

Quizplus · Accepted Answer

The overall return is calculated by taking the weighted average of the returns. The return from bonds is 0.25 * 3% = 0.75%, and the return from Ford stock is 0.75 * (-5%) = -3.75%. Adding these gives an overall return of 0.75% - 3.75% = -3.0%.

Your Grandparents Give You $1,000 as a Graduation Gift; You