You own a portfolio that has $1,950 invested in Stock A and $3,200 invested in S

Question

You own a portfolio that has $1,950 invested in Stock A and $3,200 invested in Stock B. If the expected returns on these stocks are 13 percent and 16 percent, respectively, what is the expected return on the portfolio?(Do not round your intermediate calculations.)

a) 15.61%

b) 15.16%

c) 14.86%

d) 14.14%

e) 14.50%

You own a portfolio that has $1,950 invested in Stock A and $3,200 invested in Stock B. If the expected returns on these stocks are 13 percent and 16 percent, respectively, what is the expected return on the portfolio?(Do not round your intermediate calculations.)

Explanation / Answer

Expected Return on Portfolio = (Stock A / (Stock A + stock B) * Expected Returns of A) +  (Stock B / (Stock A + stock B) * Expected Returns of B)

Expected return of Portfolio = ((1950 / 5150) * 0.13) + ((3200 / 5150) * 0.16) = 0.1486 = 14.86%

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