A portfolio is entirely invested into BBB stock, which is expected to return 16.4 percent, and ZI bonds, which are expected to return 8.6 percent. 48 percent of the funds are invested in BBB and the rest in ZI. What is the expected return on the portfolio? Select one: a. 13.64% b. 14.36% c. 12.34% d. 14.20% e. 11.69%
| Calculation of the expected return of the portfolio | ||||||||
| Expected Return = Investment n BBB* Return+ Investment in ZI* Return | ||||||||
| 16.4*48%+8.6*52% | ||||||||
| 7.87+4.47 | ||||||||
| 12.34% | ||||||||
| The expected return of the portfolio is 12.34% | ||||||||
| The correct option is | ||||||||
| C. 12.34% | ||||||||
A portfolio is entirely invested into BBB stock, which is expected to return 16.4 percent, and...