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You own a portfolio that has $4,400 invested in stocks and $5,600 invested in bonds. What is the expected return of the portfolio if stocks and bonds are expected to yield a return of 9% and 5%, respectively

Respuesta :

abiolataiwo2015

The  expected return of the portfolio if stocks and bonds are expected to yield a return of 9% and 5%, respectively is: 6.76%.

Expected return

First step

Total Invested = 4400+5600

Total invested = $10,000

Stock A% = 4400/10000= 44%

Stock B% =5600/10000 = 56%

Second step

Rp = [w Rf(1)] + [w Rf(2)]

Rp = (44%×9%) + (56%×5%)

Rp=0.0396+0.028

Rp=6.76%

Therefore the  expected return of the portfolio if stocks and bonds are expected to yield a return of 9% and 5%, respectively is: 6.76%.

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