Total Amount = $66000
First Stock
Weight of first stock = W1 = 19%, Expected return of the first stock = E[R1] = 10%
Amount invested in second stock = $34000
Second stock
Weight of the second stock = W2 = Amount invested in second stock/Total amount invested = 34000/66000 = 51.5151515151515%
Expected return of second stock = E[R2] = 14%
The rest of the money is invested in the third stock.
Third stock
Weight of the third stock = W3 = 100% - W1 - W2 = 100% - 19% - 51.5151515151515% = 29.4848484848485%
Expected return of the third stock = E[R3] = 19%
Portfolio
W1 = 19%, E[R1] = 10%; W2 = 51.5151515151515%, E[R2] = 14%; W3 = 29.4848484848485%, E[R3] = 19%
Expected return of the portfolio is calculated using the formula:
Expected return of the portfolio = E[RP] = W1*E[R1] + W2*E[R2] + W3*E[R3] = 19%*10% + 51.5151515151515%*14% + 29.4848484848485%*19% = 14.7142424242424% ~ 14.71% (Rounded to two decimals)
Answer -> The expected return of your portfolio is 14.71 %
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