Expected rate of return is the anticipated profit or loss of an investment to be received by the investor. It is computed by expecting the probabilities of a maximum range of returns on an investment. The investment in stock 1 is $9,000 and its return is 18%. The investment in other stock is $21,000 and its return is 8%.

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You own a portfolio that has $2,600 invested in Stock A and $3,700 invested in Stock B. Assume the expected returns on these stocks are 11 percent and 17 percent, respectively. What is the expected return on the portfolio?

Answer 1

Question

Chapter 8, Problem 6PROB

Summary Introduction

Expected rate of return is the anticipated profit or loss of an investment to be received by the investor. It is computed by expecting the probabilities of a maximum range of returns on an investment.

The investment in stock 1 is $9,000 and its return is 18%. The investment in other stock is $21,000 and its return is 8%.

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