Final answer:
To calculate the expected return of the portfolio with $60 in a risk-free asset at 2%, we earn $1.20 over one year. Without information on the stock's return, the total portfolio return cannot be precisely determined.
Step-by-step explanation:
The expected return of a portfolio that has invested $10 in stock A and $60 in a risk-free asset can be calculated by considering the returns from each portion separately. Since there's no information provided about the return from stock A, we can only calculate the return from the risk-free asset.
The risk-free asset has a return of 2%, as stated. Therefore, to calculate the return on the total investment, we would take the $60 invested in the risk-free asset and calculate the interest earned over 1 year which is ($60 × 0.02 = $1.20). Adding this to the principal gives us a total of $61.20.
Without the return rate on stock A, we cannot determine the complete portfolio return but can confirm a minimum guaranteed return of $1.20 from the risk-free asset.