question archive Consider a $70,000 portfolio consisting of three stocks

Consider a $70,000 portfolio consisting of three stocks

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Consider a $70,000 portfolio consisting of three stocks. Their values and expected returns are as follows: Stock Expected Return 5% A Investment $5,000 30,000 35,000 B 5 25 ? What is the weighted-average expected return on the portfolio? Round your answer to one decimal place. %

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The weighted average return can be found using the formula:

Weighted average return = Weight of stock A * Return of stock A +Weight of stock B * Return of stock B + Weight of stock C * Return of stock C

Weight of stock A = (5000/70000)*100 = 7.14%

Weight of stock B = (30000/70000)*100 = 42.86%

Weight of stock C = (35000/70000)*100 = 50%

Weighted average return = 7.14% * 5% + 42.86% * 5% + 50% * 25% = 15%