Stock A has an expected return of 10 percent per year and stock B has an expected return of 20 percent. If 40 percent of a portfolio's funds are invested in stock A and the rest in stock B, what is the expected return on the portfolio of stock A and stock B?
A)10 percent
B)20 percent
C)16 percent
D)14 percent

Question

Quizplus · Accepted Answer

Expected return on the portfolio = (0.4 x 10%) + (0.6 x 20%) = 4% + 12% = 16%

Stock a Has an Expected Return of 10 Percent Per