Your retirement portfolio comprises 100 shares of the Standard & Poor's 500 fund (SPY) and 100 shares of iShares Barclays Aggregate Bond Fund (AGG). The price of SPY is $118 and that of AGG is $97. If you expect the return on SPY to be 11% in the next year and the return on AGG to be 6%, what is the expected return for your retirement portfolio?

Question

Quizplus · Accepted Answer

A) To calculate the expected return on the portfolio, compute portfolio weights in SPY and AGG. Multiply weight of SPY by return on SPY and weight of AGG by return on AGG.
Alternatively, the expected return on the portfolio can be calculated as follows: 11ea84dc_f52e_fbc1_9a63_d59314009573_TB1316_00_TB1316_00 11ea84dc_f52e_fbc2_9a63_b3baa16e7f88_TB1316_00_TB1316_00 11ea84dc_f52e_fbc3_9a63_a79b15e5be40_TB1316_00_TB1316_00

Your Retirement Portfolio Comprises 100 Shares of the Standard