Table 8.2
You are going to invest $20,000 in a portfolio consisting of assets X,Y,and Z,as follows:
-Given the information in Table 8.2,what is the expected return of this portfolio?
A)11.40%
B)10.00%
C)11.33%
D)11.70%

Question

Table 8.2
You are going to invest $20,000 in a portfolio consisting of assets X,Y,and Z,as follows: 
-Given the information in Table 8.2,what is the expected return of this portfolio?
A)11.40% 
B)10.00% 
C)11.33% 
D)11.70%

Quizplus · Accepted Answer

To find the expected return of the portfolio, we need to multiply the weight of each asset by its expected return and then add them up. 
Expected Return = (0.40 x 0.12) + (0.30 x 0.08) + (0.30 x 0.16) = 0.048 + 0.024 + 0.048 = 0.12 or 12%
Therefore, the expected return of the portfolio is 11.33% (rounded to two decimal places). Therefore, the best choice is C.

Table 8.2 You Are Going to Invest $20,000 in a Portfolio Consisting