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you have $1,000 to make investments, which will allocate $350 in stock x, $200 in stock y, and the rest in stock z. the expected returns of these stocks are 8 percent, 16 percent, and 10 percent, respectively. what is the expected return of the portfolio?

Respuesta :

tutorconsortium624

The expected return of the portfolio is $85.

How to calculate expected return from investments?

The amount invested in

Stock x = $350

Stock y = $200

Stock Z = Total investment – (Stock x + Stock y)

             = 1000 – (350 + 200) = 450

Therefore, the amount invested in Stock z will be $450

Expected returns from stock = amount invested in Stock x Expected returns (%)

Therefore,

Expected returns from Stock x = 350 × [tex]\frac{8}{100}[/tex] = 28

Expected returns from Stock y = 200 × [tex]\frac{16}{100}[/tex] = 32

Expected returns from Stock z = 450 × [tex]\frac{10}{100}[/tex] = 45

The expected returns from stock x, y and z are $28, $32 and $45 respectively.

The expected return of the portfolio = 28 + 32 + 45 = 85

The expected return of the portfolio is $85 (from all the three stocks).

To know more about Expected return of a portfolio, check out:

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