Question

You invested 190,000 in the following stocks: ABC: 49,400$ amount ; 0.88 BETA, DEF: 62,700$ ; beta 1.28 GHI 49, 400$ ; beta 1.43 JKL: 28,500$; beta 1.23 If the risk free rate is 5.8%, and the market premium is 8.8% what is the expected return on your portfolio? do not round until final answer

Answer 1

To calculate the expected return on the portfolio, you need to calculate the weighted average of the expected returns of each stock.

Step-by-step explanation:

To calculate the expected return on the portfolio, we need to calculate the weighted average of the expected returns of each stock.

For ABC: Expected return = 0.0494 * (0.058 + 0.088) = 0.0073136

For DEF: Expected return = 0.0627 * (0.058 + 0.088) = 0.0093981

For GHI: Expected return = 0.0494 * (0.058 + 0.088) = 0.0073136

For JKL: Expected return = 0.0285 * (0.058 + 0.088) = 0.0048885

Expected return on the portfolio = 0.0073136 + 0.0093981 + 0.0073136 + 0.0048885 = 0.0289138