40. What is the expected return for the following portfolio? (State your answer in percent with...
40. What is the expected return for the following portfolio?
(State your answer in percent with two decimal places.)
Stock Expected
returns Investment
AAA
34%
$400,000
BBB
29%
$1,100,000
CCC
19%
$1,500,000
DDD
5%
$1,400,000
Homework Answers
| Stock | Expected Returns (ER) | Investment | Portfolio weight (w) | Product (ER x w) |
| AAA | 34% | 400,000 | 9.09% | 3.09% |
| BBB | 29% | 1,100,000 | 25.00% | 7.25% |
| CCC | 19% | 1,500,000 | 34.09% | 6.48% |
| DDD | 5% | 1,400,000 | 31.82% | 1.59% |
| 4,400,000 | 100.00% | 18.41% |
Therefore, expected portfolio return = 18.41%
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