You own a portfolio consisting of the securities listed below. The expected return for each security...
You own a portfolio consisting of the securities listed below.
The expected return for each security is as shown. What is the
expected return on the portfolio?
| Stock | Number of Shares |
Price per share |
Expected Return | ||||||
| A | 175 | $ | 9 | 11.2 | % | ||||
| B | 250 | 18 | 16.4 | % | |||||
| C | 400 | 56 | 8.7 | % | |||||
| D | 225 | 39 | 24.5 | % | |||||
A. 14.14%
B. 13.81%
C. 12.91%
D. 13.46%
E. 13.28%
Homework Answers
The correct answer is 13.46%
Note:
| Stock | Number of Shares | Price per share | Value ( Number of Shares * Price Per Share) | Weight(Value / Total Value) | Expected Return | Weight * Expected Return |
| A | 175 | 9 | 1,575 | 0.042281879 | 11.2 | 0.473557047 |
| B | 250 | 18 | 4,500 | 0.120805369 | 16.4 | 1.981208054 |
| C | 400 | 56 | 22,400 | 0.601342282 | 8.7 | 5.231677852 |
| D | 225 | 39 | 8,775 | 0.23557047 | 24.5 | 5.77147651 |
| 37,250 | Expected return on the portfolio | 13.46 % | ||||
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