Fremont enterprises has an expected return of 12% and laurelhurst news has an expected return of 24%. if you put 69% of your portfolio in laurelhurst and 31% in fremont, what is the expected return of your portfolio?

Question

Lane Galvan

Business

14 July, 12:20

Fremont enterprises has an expected return of 12% and laurelhurst news has an expected return of 24%. if you put 69% of your portfolio in laurelhurst and 31% in fremont, what is the expected return of your portfolio?

+5

Answers (1)

Know the Answer?

Jonathan Pearson · Answer 1

20%

This is a simple matter of multiplying the percentage of your portfolio in each investment by the expected return of each investment. For example, with the Fremont investment, you expect a 12% return. Since you've invested 31% of your portfolio there, you can phrase that as "I expect 31% of my portfolio to have a 12% return" and that logic extends to all of the investments in your portfolio. So

0.69*0.24 + 0.31*0.12 = 0.1656 + 0.0372 = 0.2028 = 20.28%

So you have an expected return of 20% on your portfolio.