You have invested $25,000 in RBC stock and $18,000 in TD stock.If you expect the return on RBC to be 6% in the next year,and the return on TD to be 4%,what is the expected return for your portfolio?

Question

Quizplus · Accepted Answer

To find the expected return for the portfolio, we need to calculate the weighted average of the returns of RBC and TD.

Weight of RBC = ($25,000/$43,000) = 0.5814
Weight of TD = ($18,000/$43,000) = 0.4186

Expected return = (0.5814 x 6%) + (0.4186 x 4%) = 3.4884% + 1.6744% = 5.1628% ≈ 5.2%

Therefore, the expected return for the portfolio is 5.2%, which is closest to option C.

You Have Invested $25,000 in RBC Stock and $18,000 in TD