What is the expected return on a portfolio comprised of $6,200 of stock M and $4,500 of stock N if the economy enjoys a boom period?

A)10.93 percent
B)11.16 percent
C)12.55 percent
D)12.78 percent
E)13.69 percent

Question

What is the expected return on a portfolio comprised of $6,200 of stock M and $4,500 of stock N if the economy enjoys a boom period?

A)10.93 percent 
B)11.16 percent 
C)12.55 percent 
D)12.78 percent 
E)13.69 percent

Quizplus · Accepted Answer

E(r)_Boom = [$6,200/($6,200 + $4,500)][0.20] + [$4,500/($6,200 + $4,500)] [0.05] = 13.69 percent

What Is the Expected Return on a Portfolio Comprised of $6,200