Question

Year-to-date, Oracle had earned a −1.34 percent return. During the same time period, Valero Energy earned 7.96 percent and McDonald's earned 0.88 percent. If you have a portfolio made up of 30 percent Oracle, 25 percent Valero Energy, and 45 percent McDonald's, what is your portfolio return?

Answer 1

The portfolio return is 1.984%

Step-by-step explanation:

The portfolio return is the weighted average of the returns of individual stocks that form up the portfolio. The portfolio return is calculated as follows,

Portfolio Return = wA * rA + wB * rB + ... + wN * rN

Where,

• w represents the weight of each stock in the portfolio
• r represents the return of each stock

Portfolio return = 0.3 * -1.34% + 0.25 * 7.96% + 0.45 * 0.88%

Portfolio return = 1.984% or 0.01984