Question

You own a portfolio that is invested 35 percent in Stock X, 20 percent in Stock Y, and 45 percent in Stock Z. The expected returns on these three stocks are 9 percent, 15 percent, and 12 percent, respectively. What is the expected return on the portfolio

Answer 1

the expected return on the portfolio is 11.55%

Step-by-step explanation:

The computation of the expected return on the portfolio is shown below:

= Respected Probabilities × respected return

= (0.35 × 0.09) + (0.2 × 0.15) + (0.45 × 0.12)

= 0.0315 + 0.03 + 0.054

= 0.1155

= 11.55%

hence, the expected return on the portfolio is 11.55%