The expected return of a portfolio of loans is equal to the weighted average of the expected returns of the individual loans.

Question

Quizplus · Accepted Answer

This is correct as the expected return of a portfolio is the sum of the expected returns of each asset multiplied by its respective weight in the portfolio. Therefore, the expected return of a portfolio of loans is equal to the weighted average of the expected returns of the individual loans.

The Expected Return of a Portfolio of Loans Is Equal