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10. Suppose you have invested 50% of your money in RBC’s stock and the rest in...

10. Suppose you have invested 50% of your money in RBC’s stock and the rest in Air Canada’s stock. If you expect the return on RBC to be 6% in the next year, and the return on Air Canada to be 8%, what is the expected return for your portfolio?

a. 6.4%

b. 7%

c. 6%

d. 8%

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Answer #1

Rest in Air Canada’s stock=100-50

=50%

Expected return=Respective return*Respective weight

=(0.5*6)+(0.5*8)

which is equal to

=7%

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