A portfolio with an expected return of 9.6455% contains 4 stocks as outlined below. What amount (market value) is invested in Stock A?
| Stock | Expected Return | Market Value |
| A | 8.50% | X |
| B | 12.25% | 650,000 |
| C | 3.75% | 200,000 |
| D | 9.00% | 175,000 |
A. $1,025,000
B. $1,000,000
C. $341,667
D. $350,000
expected return of portfolio = weighted average return
=>
(x*8.5% + 650000 * 12.25% + 200000 * 3.75% + 175000 * 9%)/(x+650000 + 200000 + 175000) = 9.6455%
=>
x*8.5% + 650000 * 12.25% + 200000 * 3.75% + 175000 * 9% = 9.6455% x+(650000 + 200000 + 175000)*9.6455%
=>
x = 349945.43
hence choose D) 350000
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