In a particular year, Lost Hope Mutual Fund made the following investments in asset classes:
-The total extra return on the managed portfolio was __________.
A) 1%
B) 2%
C) 3%
D) 4%

Question

In a particular year, Lost Hope Mutual Fund made the following investments in asset classes: 
-The total extra return on the managed portfolio was __________.
A) 1% 
B) 2% 
C) 3% 
D) 4%

Quizplus · Accepted Answer

To find the total extra return on the managed portfolio, we need to calculate the weighted average return for each asset class and then add up the extra returns. 
Weighted average return for Asset class A: (0.3 x 12%) + (0.7 x 8%) = 8.6%
Extra return for Asset class A: 8.6% - 8% = 0.6%
Weighted average return for Asset class B: (0.4 x 10%) + (0.6 x 6%) = 7.6%
Extra return for Asset class B: 7.6% - 7% = 0.6%
Weighted average return for Asset class C: (0.2 x 8%) + (0.8 x 3%) = 3.4%
Extra return for Asset class C: 3.4% - 3% = 0.4%
Total extra return: 0.6% + 0.6% + 0.4% = 1.6%
Therefore, the answer is A) 1%.

In a Particular Year, Lost Hope Mutual Fund Made the Following