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James is building a 3-stock portfolio. The weights and returns of the stocks are below. The...

James is building a 3-stock portfolio. The weights and returns of the stocks are below. The Risk-Free Rate is 3%. What is the Expected Return of this portfolio? Weight A = 60%; Weight B = 25%; Weight C = 15%; Return A = 15%; Return B = -3%; Return C = 2.9%. 1. 7.50% 2. 8.70% 3. 11.70% 4. 17.90%

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Answer #1

Expected ret of Portfolio = Weighted Avg Ret of securities in Portfolio.

Security Weight Ret Wtd Ret
A          0.60 15.00% 9.00%
B          0.25 -3.00% -0.75%
C          0.15 2.90% 0.44%
Expected Portfolio Ret 8.69%

OPtion 2 Is correct.

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

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