Question

In: Finance

You own a portfolio that has $9,283 invested in Stock A and $6,556 invested in Stock...

You own a portfolio that has $9,283 invested in Stock A and $6,556 invested in Stock B. If the expected returns on these stocks are 0.14 and 0.15, respectively, what is the expected return on the portfolio?

Enter the answer with 4 decimals (e.g. 0.1234).

Solutions

Expert Solution

Expected return on the portfolio = (Weight of Stock A * Beta of Stock A) + (Weight of Stock B * Beta of Stock B)

Expected return on the portfolio = [($9,283/$15,839) * 0.14] + [($6,556/$15,839) * 0.15]

Expected return on the portfolio = 0.1441


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