Question

You have a portfolio with the following: Stock Number of Shares Price Expected Return W 1,000 $ 57 14% X 900 34 18 Y 650 70 16 Z 875 55 17 What is the expected return of your portfolio

Answer 1

Expected return on portfolio = 15.97%

Step-by-step explanation:

The expected return on the portfolio is the weighted average return of all the different stocks making up the portfolio. The weight of the individual stock would be the relative amount invested in each stock as a proportion of the total fund invested.

Total value of the portfolio

$

W= (1,000× $ 57) = 57,000

X = (900 × 34 ) = 30,600

Y = (650× 70) = 45,500

Z = 875 55 = 48,125

Total = 181.225

Total fund value = 181.225

Expected return on Portfolio

(57000 / 181,225) × 14% + (30600 /181,225)× 18% + (45500 / 181,225)× 16%

(48,125 /181,225)× 17% =15.97%

Expected return on portfolio = 15.97%