(a) An investor wishes to construct a portfolio consisting of a 30 percent allocation to a share index, 30 percent to a bond and a 40 percent allocation to a commodity asset. The return on the commodity asset is 4.5 percent, while rate of return for bond is 6.6 percent and the expected return on the share index is 12 percent. Calculate the expected return on this portfolio.

(a) An investor wishes to construct a portfolio consisting of a 30 percent allocation to a share index, 30 percent to a bond and a 40 percent allocation to a commodity asset. The return on the commodity asset is 4.5 percent, while rate of return for bond is 6.6 percent and the expected return on the share index is 12 percent. Calculate the expected return on this portfolio.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 16P

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