Question

Question 18 5 pts Bill Dukes $100,000 invested in Stock A, $35,000 in Stock B, and the remainder of his $200,000 portfolio is in Stock C. Stocks A, B, and C have expected returns of 14%, 16%, and 18%. What is the portfolio's expected return? (Hint: First calculate the dollars invested in Stock C.) 13.96% 17.14% 15.65% 14.55% 13.01% D Question 19 Jim Angel holds a $300,000 portfolio consisting of the following stocks: 5 pts Stock Investment

Answer 1

Answer: The correct answer is 15.65%

Proportion of amount invested in stock A=100000/200000=0.5
Proportion of amount invested in stock B=35000/200000=0.175
Proportion of amount invested in stock C=(200000-100000-35000)/200000=(65000)/200000=0.325
Portfolio's expected return is the summation of (Proportion of amount invested in a stock)*(Expected return of the stock)

=(0.5)*(14%)+(0.175)*(16%)+(0.325)*(18%)
=0.07+0.028+0.0585
=0.1565 or 15.65%