There are two assets A and B. I invest 70% of my portfolio in A and...

There are two assets A and B. I invest 70% of my portfolio in A and 30% in B.

Suppose A's expected return is 10%, and B's expected return is 20%. What is the expected return of my portfolio?

Expert Solution

Expected return of portfolio = WA*RA+WB*RB

Given,

Weight of A (WA) = 70%

Weight of B (WB) = 30%

Return of A (RA) = 10%

Return of B (RB) = 20%

Expected return of portfolio= 0.7*10%+0.3*20%

= 7%+6%

= 13%

Expected return of portfolio = 13%

jeff jeffy answered 2 years ago

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