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

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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%