Question

What is the expected return of he three stock portfolio described below? common stock Market Value...

What is the expected return of he three stock portfolio described below?

common stock Market Value Expected Return
Ando Inc 95,000 12.0%
Bee Co 25,000 8.0%
Cool Inc 30,000 17.0%

A- 10.33%

B-11.33%

C-12.33%

D-12%

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Answer #1
Portfolio Return is the weighted avg return of securities in that portfolio
Stock Market Value Weight Ret WTd Ret
Ando Inc 95000 0.63 0.1200               0.0760
Bee Co 25000 0.17 0.8000               0.1333
Cool Inc 30000 0.20 0.1700               0.0340
Expected return of the Portfolio               0.2433

Weights

Ando INc = 95000/(95000+25000+30000) = 0.63

Bee Co = 25000/(95000+25000+30000) = 0.17

Cool Inc = 30000/(95000+25000+30000) = 0.20

Pls do rate, if the answer is correct and comment, if any further assistance is required

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