Your investment portfolio contains 100 shares of RBC,75 shares of TD,and 200 shares of WestJet.The price of RBC is currently $75 per share,the price of TD is $55 and the price of WestJet is currently $21 per share.If you expect the return on RBC to be 5% in the next year,the return on TD to be 6.5%,and the return on WestJet to be 10%,what is the expected return for your portfolio?

Question

Quizplus · Accepted Answer

The expected return of the portfolio is calculated by taking the weighted average of the expected returns of the individual investments. The weights are based on the proportion of the total investment in each stock. The total value of the portfolio is (100*$75) + (75*$55) + (200*$21) = $7500 + $4125 + $4200 = $15825. The expected return is [(7500/15825)*5%] + [(4125/15825)*6.5%] + [(4200/15825)*10%] = 6.7%.

Your Investment Portfolio Contains 100 Shares of RBC,75 Shares of TD,and