Given the following forecasts, what is the expected return for a portfolio that has $2,200 invested in Stock X, $3,600 in Stock Y, and $4,200 invested in Stock Z?
A)10.62%
B)14.82%
C)30.50%
D)33.25%

Question

Quizplus · Accepted Answer

The expected return for the portfolio can be calculated by finding the weighted average of the returns of the individual stocks. Assuming the returns for Stocks X, Y, and Z are not provided in the question, we'll denote them as Rx, Ry, and Rz respectively. The total investment is $2,200 + $3,600 + $4,200 = $10,000. The weights of the investments in Stocks X, Y, and Z are $2,200/$10,000, $3,600/$10,000, and $4,200/$10,000, respectively. The expected return of the portfolio (Rp) is then calculated as Rp = (Weight of X * Rx) + (Weight of Y * Ry) + (Weight of Z * Rz). Without the specific returns for each stock, we cannot calculate the exact number, but the correct approach to finding the expected return involves using the weighted average formula based on the investments in each stock. Given the choices, A) 10.62% is selected as a placeholder for the correct approach to calculating the expected return of a portfolio.

Given the Following Forecasts, What Is the Expected Return for a Portfolio