Portfolio Return Year to date, Company Y had earned a 7 percent return. During the same time period, Company R earned 9.25 percent and Company C earned -2.25 percent. If you have a portfolio made up of 35 percent Y, 40 percent R, and 25 percent C, what is your portfolio return?
A) 4.6667%
B) 6.1667%
C) 5.5875%
D) 12.6625%

Question

Quizplus · Accepted Answer

To find the portfolio return, we need to take the weighted average of the returns for each company based on their percentage allocation in the portfolio.

Portfolio return = (0.35 * 7%) + (0.40 * 9.25%) + (0.25 * -2.25%) 
Portfolio return = 2.45% + 3.70% - 0.5625% 
Portfolio return = 5.5875%

Therefore, the portfolio return is 5.5875% which is closest to option C: 5.5875%.

Portfolio Return Year to Date, Company Y Had Earned a 7