A portfolio is entirely invested into Buzz's Bauxite Boring Equity,which is expected to return 18%,and Zum's Inc.bonds,which are expected to return 9%.Sixty percent of the funds are invested in Buzz's and the rest in Zum's.What is the expected return on the portfolio?
A)6.4%
B)9.6%
C)12.8%
D)14.4%
E)Need additional information.

Question

Quizplus · Accepted Answer

The expected return on the portfolio is calculated by taking a weighted average of the returns of the investments. With 60% in Buzz's at 18% and 40% in Zum's at 9%, the expected return is (0.6 * 18%) + (0.4 * 9%) = 10.8% + 3.6% = 14.4%.

A Portfolio Is Entirely Invested into Buzz's Bauxite Boring Equity,which