Your portfolio that has $500 invested in Stock A and $1,500 invested in Stock B.If the expected returns on Stock A and Stock B are 7% and 23%, respectively, what is the portfolio return?
A)19.00%
B)17.80%
C)16.10%
D)12.00%

Question

Quizplus · Accepted Answer

The portfolio return is the weighted average of the expected returns on the individual stocks. The weight of each stock is its proportion of the total portfolio value. In this case, the weight of Stock A is $500/$2,000 = 0.25, and the weight of Stock B is $1,500/$2,000 = 0.75. Therefore, the portfolio return is (0.25 * 7%) + (0.75 * 23%) = 19.00%.

Your Portfolio That Has $500 Invested in Stock a and $1,500