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4 January, 11:40

A portfolio is invested 22 percent in Stock G, 50 percent in Stock J, and 28 percent in Stock K. The expected returns on these stocks are 7 percent, 13 percent, and 17 percent, respectively. What is the portfolio's expected return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e. g., 32.16.)

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  1. 4 January, 12:01
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    The expected return of the portfolio is 12.8%

    Explanation:

    A portfolio is invested 22% on stock G, 50% on stock J and 28% on stock K.

    The expected return on stock G is 7%, on stock J is 13% and on stock K is 17%.

    Weighted return on stock G

    = 0.22*7%

    =1.54%

    Weighted return on stock J

    =0.50*13%

    =6.5%

    Weighted return on stock K

    =0.28*17%

    =4.76%

    The expected return on the portfolio

    =Weighted return on stock G+Weighted return on stock J+Weighted return on stock K

    = (1.54+6.5+4.76) %

    =12.8%
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