If you invest 35% of your investment in MicroGap with an expected rate of return of...
If you invest 35% of your investment in MicroGap with an expected rate of return of 14 % and the remainder in Amgen with an expected rate of return of 8 %, the expected return on your portfolio is:
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12.4% |
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13.6% |
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|
10.1% |
||
|
11.5% |
Homework Answers
Expected return on portfolio = (weight of investment in MicroGap * expected rate of return in MicroGap) + (weight of investment in Amgen * expected rate of return in Amgen)
weight of investment in Amgen = 1 - 0.35 = 0.65
Expected return on portfolio = (0.35 * 14%) + (0.65 * 8%) = 10.1%
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