You have a portfolio with the following: Stock Number of Shares Price Expected Return W 1,025 $ 58 11% X 925 35 15 Y 675 71 13 Z 900 56 14 What is the expected return of your portfolio?
Risk and return
Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.
Capital Asset Pricing Model
Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.
| You have a portfolio with the following: |
| Stock | Number of Shares | Price | Expected Return |
| W | 1,025 | $ 58 | 11% |
| X | 925 | 35 | 15 |
| Y | 675 | 71 | 13 |
| Z | 900 | 56 | 14 |
|
What is the expected return of your portfolio? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
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