You own a portfolio that is 30 percent invested in Stock X, 20 percent in Stock Y, and 50 percent in Stock Z. The expected returns on these three stocks are 11 percent, 17 percent, and 13 percent, respectively. What is the expected return on the portfolio?
Expected return is a term used in finance. It is referred to as the expected profit or loss on an investment. In the case of a portfolio of assets, the expected return is a function of the value of each asset in the portfolio. The higher the value, the higher the weighting given to the expected return.
Answer and Explanation:
The answer is: 13.20%
We can use the following formula to answer this question:
Expected return of the portfolio = (Weight of stock X * Return of...
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fromChapter 12 / Lesson 1
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.