A portfolio comprises 100 shares of Quicksand Mining Co. ($130 per share) and 200 shares of...
A portfolio comprises 100 shares of Quicksand Mining Co. ($130 per share) and 200 shares of Bad Bet Bond Fund ($32.50 per share). The expected return on Quicks & Mining Co.’s shares is 60% and the expected return on Bad Bet Bond Fund’s shares is 30%, what is the expected return for the portfolio?
Homework Answers
Total value of Quicksand Mining Co. = 100 * 130 = 13,000
Total value of Bad Bet Bond Fund = 200 * 32.5 = 6,500
Total value =13,000 + 6,500 = 19,500
Expected return for the portfolio = (13,000 / 19,500)*0.6 + (6,500 / 19,500)*0.3
Expected return for the portfolio = 0.4 + 0.1
Expected return for the portfolio = 0.5 or 50.00%
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