Your retirement portfolio comprises 200 shares of the S&P 500 fund (SPY) and 100 shares of iShares Barclays Aggregate Bond Fund (AGG). The price of SPY is $134 and that of AGG is $110. If you expect the return on SPY to be 10% in the next year and the return on AGG to be 8%, what is the expected return for your retirement portfolio?

Question

Quizplus · Accepted Answer

D) 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_f52f_49e7_9a63_dd8cec405563_TB1316_00_TB1316_00 11ea84dc_f52f_49e8_9a63_558eb946fce1_TB1316_00_TB1316_00 11ea84dc_f52f_49e9_9a63_63656165a23e_TB1316_00_TB1316_00

Your Retirement Portfolio Comprises 200 Shares of the S&P 500