You own a portfolio that is 30 percent invested in Stock X, 20 percent in Stock Y, and 50 percent in Stock Z. The expected returns on these three stocks are 9 percent, 15 percent, and 11 percent, respectively. What is the expected return on the portfolio

Question

Devan Hale

Business

19 December, 14:40

You own a portfolio that is 30 percent invested in Stock X, 20 percent in Stock Y, and 50 percent in Stock Z. The expected returns on these three stocks are 9 percent, 15 percent, and 11 percent, respectively. What is the expected return on the portfolio

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Answers (1)

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Miriam Walker · Answer 1

Expected return on portfolio = Rp = 11.20 %

Explanation:

Rp = (WX * RX) + (WY * RY) + (WZ * RZ)

Rp : Return on portfolio

WX : Weight of Stock X

RX: Rate of return of Stock X

WY : Weight of Stock Y

RY: Rate of return of Stock Y

WZ : Weight of Stock Z

RZ: Rate of return of Stock Z

Rp = (30% x 9%) + (20% x 15 %) + (50 % x 11%)

Rp = 11.20 %