You have the following information about your stock portfolio. You own 4 ,000 shares of Stock...

You have the following information about your stock portfolio. You own 4 ,000 shares of Stock A which sells for $ 15 with an expected return of 8 %. You own 2,000 shares of Stock B which sells for $10 with an expected return of 6%. You own 4,000 shares of Stock C which sells for $12 with an expected return of 9%. You own 9 ,000 shares of Stock D which sells for $ 11 with an expected return of 12 %. What is the expected return on your portfolio? Show your answer to the nearest .01%.

Solutions

Expert Solution

Value of stock A=Va= no of share *share price= 4000*15 =60000

Value of stock B=Vb= no of share *share price= 2000*10=20000

Value of stock C=Vc= no of share *share price= 4000*12=48000

Value of stock D=Vd= no of share *share price= 9000*11=99000

Total value of investment= V= sum of value of stocks=60000+20000+48000+99000=227000

Expected return= Sum of( weights of stock*return of stock)

=(60000/227000)*8+(20000/227000)*6+(48000/227000)*9+(99000/227000)*12

=9.78%

jeff jeffy answered 2 years ago

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