A portfolio consists of the following two funds. What is the expected return on fund A?
A) 12.0 percent
B) 13.3 percent
C) 13.7 percent
D) 14.5 percent
E) 15.7 percent

Name: A portfolio consists of the following two funds. What is the expected return on fund A? A) 12.0 percent B) 13.3 percent C) 13.7 percent D) 14.5 percent E) 15.7 percent
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Question

A portfolio consists of the following two funds.  What is the expected return on fund A?
A) 12.0 percent 
B) 13.3 percent 
C) 13.7 percent 
D) 14.5 percent 
E) 15.7 percent

Quizplus · Accepted Answer

Portfolio weight of A = $27,000 / ($27,000 + $33,000) = 0.45 Portfolio weight of B = $33,000 / ($27,000 + $33,000) = 0.55 E(R_A) = 15.7 percent

A Portfolio Consists of the Following Two Funds