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21 December, 23:11

Year-to-date, Yum Brands had earned a 3.80 percent return. During the same time period, Raytheon earned 4.26 percent and Coca-Cola earned - 0.46 percent. If you have a portfolio made up of 30 percent Yum Brands, 30 percent Raytheon, and 40 percent Coca-Cola, what is your portfolio return?

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  1. 21 December, 23:39
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    The portfolio return is 2.234%

    Explanation:

    The portfolio return is a function of the weighted average of individual stock returns that form up the portfolio.

    The portfolio return can be calculated as follows,

    return of Portfolio = wA * rA + wB * rB + ... + wN * rN

    Where,

    w represents the weighatge of investment in a stock as a proportion of total investment in portfolio r is the return of the stock

    Return of portfolio = 0.038 * 0.3 + 0.0426 * 0.3 + (-0.0046) * 0.4

    Return of Portfolio = 0.02234 or 2.234%
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