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An investor owns a portfolio of $38,700 that contains $9,675 in stock A, with an expected...

An investor owns a portfolio of $38,700 that contains $9,675 in stock A, with an expected return of 11.3 percent; $12,900 in bonds, with an expected return of 7.3 percent; and the rest in stock B, with an expected return of 19.3 percent.

Calculate the expected return of the portfolio. (Round intermediate calculations and the final answer to 2 decimal places, e.g. 15.25%.)

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Answer #1

Expected return of the portfolio = [($9,675/$38,700) × 0.113] + [($12,900/$38,700) × 0.073)] + [($16,125/$38,700) × 0.193]

Expected return of the portfolio = 0.1330 or 13.30%

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