David is going to purchase two stocks to form the initial holdings in his portfo

Question

David is going to purchase two stocks to form the initial holdings in his portfolio. Iron stock has an expected return of 13 percent, while Copper stock has an expected return of 29 percent.

If David plans to invest 30 percent of his funds in Iron and the remainder in Copper, then what will be the expected return from his portfolio? (Round answer to 1 decimal place, e.g. 17.5%.)

What would the expected return of David's portfolio be if he invested 70 percent of his funds in Iron stock? (Round answer to 1 decimal place, e.g. 17.5%.)

David is going to purchase two stocks to form the initial holdings in his portfolio. Iron stock has an expected return of 13 percent, while Copper stock has an expected return of 29 percent.

David is going to purchase two stocks to form the initial holdings in his portfolio. Iron stock has an expected return of 13 percent, while Copper stock has an expected return of 29 percent. % What would the expected return of David's portfolio be if he invested 70 percent of his funds in Iron stock? (Round answer to 1 decimal place, e.g. 17.5%.) Expected return % If David plans to invest 30 percent of his funds in Iron and the remainder in Copper, then what will be the expected return from his portfolio? (Round answer to 1 decimal place, e.g. 17.5%.) Expected return

Explanation / Answer

Expected return on portfolio = [Weight of A * Return of A] + [Weight of B * Return of B]

A) 30 percent of funds in Iron and the remainder in Copper:-

[.30 * .13] + [.70 * .29] = 24.20%

B) 70 percent of funds in Iron and the remainder in Copper:-

[.70 * .13] + [.30 * .29] = 17.80%

Hope my solution solves your query.

Regards.

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.