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Based on the investment portfolio information shown below, what is the portfolio’s expected return? Stock Investment Return X $250,000 13.4% Y $400,000 10.9% Z $350,000 11.7

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Finance

Based on the investment portfolio information shown below, whatis the portfolio’s expected return?

Stock

Investment

Return

X

$250,000

13.4%

Y

$400,000

10.9%

Z

$350,000

11.7

Answer & Explanation Solved by verified expert
3.5 Ratings (577 Votes)

Portfolio's expected return is 11.81%

Step-1:Calculation of weight of investment of portfolio
Stock Investment
X $       2,50,000
Y $       4,00,000
Z $       3,50,000
Total $     10,00,000
Weight of stock:
X $       2,50,000 / $ 10,00,000 =           0.25
Y $       4,00,000 / $ 10,00,000 =           0.40
Z $       3,50,000 / $ 10,00,000 =           0.35
Total           1.00
Step-2:Calculation of portfolio's expected return
Weight Return
a b a*b
X                    0.25 13.40% 3.35%
Y                    0.40 10.90% 4.36%
Z                    0.35 11.70% 4.10%
Portfolio's expected return 11.81%

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