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Stock X has a return of 20% and stock Y has a return of 30%. If you put 60% of your money in X...

Question:

Stock X has a return of 20% and stock Y has a return of 30%. If you put 60% of your money in X and 40% in Y, what is the return of your portfolio?

a. 28.0%

b. 19.6%

c. 24.0%

d. 25.6%

e. 17.0%

Portfolio Risk and Return

An investor who invests in a portfolio of assets would be interested in knowing the expected return of his portfolio rather than the return of stocks in isolation. The portfolio return is the weighted average of the returns on the stocks comprising the portfolio.The proportions invested in each stock represents the weights assigned to the stock.

Answer and Explanation: 1

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Answer is c. 24

  • The portfolio return is calculated as follows:

Portfolio return = (R1 * w1) + (R2 * w2)

where R1 and R2 are returns on stocks X and...

See full answer below.


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Portfolio Weight, Return & Variance: Definition & Examples

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Chapter 12 / Lesson 1
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A portfolio can be designed in several different ways. It is important to understand the basics of a portfolio before building and managing one. In this lesson, we will go over the weight, return, and variance of a portfolio.


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