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You own a portfolio that has $2,200 invested in Stock A and $3,550 invested in Stock...

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Finance

You own a portfolio that has $2,200 invested in Stock A and$3,550 invested in Stock B. If the expected returns on these stocksare 10 percent and 17 percent, respectively, what is the expectedreturn on the portfolio? (Do not round your intermediatecalculations.)

A. 15.04%

B. 13.50%

C. 14.32%

D. 12.68%

E. 14.61%

Answer & Explanation Solved by verified expert
4.5 Ratings (641 Votes)

C. 14.32%

Step-1:Calculation of weight of investments
Investment in :
Stock A $       2,200
Stock B $       3,550
Total $       5,750
So, weight of :
Stock A $       2,200 / $    5,750 =      0.3826
Stock B $       3,550 / $    5,750 =      0.6174
Total      1.0000
Step-2:Calculation of expected return on portfolio
weight return
a b a*b
Stock A      0.3826 10% 3.83%
Stock B      0.6174 17% 10.50%
Portfolio's return 14.32%

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Transcribed Image Text

You own a portfolio that has $2,200 invested in Stock A and$3,550 invested in Stock B. If the expected returns on these stocksare 10 percent and 17 percent, respectively, what is the expectedreturn on the portfolio? (Do not round your intermediatecalculations.)A. 15.04%B. 13.50%C. 14.32%D. 12.68%E. 14.61%

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