Question

A portfolio contains 3 stocks with expected returns of 15%, 18%, and 12%, with corresponding weights of 25%, 45%, and 30%, respectively. What is the expected return of the portfolio

Answer 1

Answer:

15.45%

Explanation:

Expected return of portfolio = (R1*W1) + (R2*W2 ) + (R3*W3) (Where R means  Expected Return of stock and W means Weight of stock)

Expected return of portfolio = (15%*0.25)+(18%*0.45)+(12%*0.30)

Expected return of portfolio = 3.75% + 8.1% + 3.6%

Expected return of portfolio = 15.45%

So, the expected return of the portfolio above is 15.45%