A portfolio is entirely invested into Buzz's Bauxite Boring equity,which is expected to return 16%,and Zum's Inc. bonds,which are expected to return 8%. 60% of the funds are invested in Buzz's and the rest in Zum's. What is the expected return on the portfolio?
A) 6.4%
B) 9.6%
C) 12.8%
D) 24.2%
E) Need additional information

Question

Quizplus · Accepted Answer

The expected return on the portfolio is calculated by multiplying the return of each investment by its respective weight in the portfolio and summing the results: (0.60 * 16%) + (0.40 * 8%) = 9.6% + 3.2% = 12.8%.

A Portfolio Is Entirely Invested into Buzz's Bauxite Boring Equity,which