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You hold a portfolio with the following securities: Security Percent of portfolio Return Stock A 33% 11
You hold a portfolio with the following securities:
| Security | Percent of portfolio | Return |
|---|---|---|
| Stock A | 33% | 11.7% |
| Stock B | 15% | 5.8% |
| Stock C | Please calculate it | 3.4% |
Calculate the expected return of portfolio. Round the answers to two decimal places in percentage form.V
Expert Solution
The return is computed as follows:
= Percent of security A x Return on security A + Percent of security B x Return on security B + (1 - Percent of security A - Percent of Security B) x Return on security C
= 0.33 x 0.117 + 0.15 x 0.058 + (1 - 0.33 - 0.15) x 0.034
= 0.33 x 0.117 + 0.15 x 0.058 + 0.52 x 0.034
= 6.50% Approximately
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