You have the following information about your stock portfolio. You own 9,000 shares of Stock A which sells for $ 14 with an expected return of 6 %. You own 2,000 shares of Stock B which sells for $10 with an expected return of 6%. You own 4,000 shares of Stock C which sells for $12 with an expected return of 9%. You own 2,000 shares of Stock D which sells for $ 16 with an expected return of 9 %. What is the expected return on your portfolio? Show your answer to the nearest. 01%.

Question

Logan Hammond

Business

30 July, 00:37

You have the following information about your stock portfolio. You own 9,000 shares of Stock A which sells for $ 14 with an expected return of 6 %. You own 2,000 shares of Stock B which sells for $10 with an expected return of 6%. You own 4,000 shares of Stock C which sells for $12 with an expected return of 9%. You own 2,000 shares of Stock D which sells for $ 16 with an expected return of 9 %. What is the expected return on your portfolio? Show your answer to the nearest. 01%.

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Answers (1)

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Mercer · Answer 1

7.06%

Explanation:

We will work this through a weighted-average approach:

Stock Shares Price Value Weight

A 9000 $14 $126000 0.557522124 (126,000/226,000)

B 2000 $10 $20000 0.088495575 (20,000/226,000)

C 4000 $12 $48000 0.212389381 (48,000/226,000)

D 2000 $16 $32000 0.14159292 (32,000/226,000)

$226000 1

Then we aply that weight to each stock return

Stock Return Weighted return

A 0.06 0.033451327

B 0.06 0.005309735

C 0.09 0.019115044

D 0.09 0.012743363

0.070619469

The estimated return will be of 7.06%