Question

stock a has an expected return of 20 and stock b has an expected return of 5. what is the expected return on a portfolio this comprised of 67^ of stock a and 33% stoc k b

Answer 1

15.05%

Step-by-step explanation:

Calculation to determine the expected return on a portfolio

Using this formula

Expected return = (Return on stock A * Percentage invested in stock A) + ( Return on Stock B * Percentage invested in Stock B)

Let plug in the formula

Expected return= (20% * 67%) + (5% * 33%)

Expected return= 13.4% + 1.65%

Expected return= 15.05%

Therefore the expected return on a portfolio is 15.05%