What is the expected return for the following portfolio? (State your answer in percent with two decimal places.) Stock Expected returns Investment AAA 334 $500,000 BBB 284 $1,300,000 ccc 14% $1,200,000 DDD 84 $1, 500,000 20.79% 16.03% 19.66% 18.16% O 22.35%
What is the expected return for the following portfolio? (State your answer in percent with two decimal places.) Stock Expected returns Investment AAA 334 $500,000 BBB 284 $1,300,000 ccc 14% $1,200,000 DDD 84 $1, 500,000 20.79% 16.03% 19.66% 18.16% O 22.35%
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:What is the expected return for the following portfolio? (State your answer in percent
with two decimal places.)
Stock Expected returns Investment
AAA 334 $500,000
BBB 284 $1, 300,000
ccC 144 $1, 200,000
DDD 88 $1,50o0,000
20.79%
16.03%
19.66%
18.16%
22.35%
Expert Solution
Step 1Basic Information
The question is related to Expected Return of Portfolio. The expected return of Portfolio is calculated with the help of following formula
Expected Return of Portfolio = Expected return of Stock 1 × weight of Stock 2 + Expected Return of Stock 2 × weight of Stock 2
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