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You invest $9,000 in a share that has an expected return of 14%, and $16,000 in another share with an expected return of 7%. What is the expected return on your share portfolio? Group of answer choices 14% 21% 14.875% 9.52% 39.76%

Question

You invest 9,000inasharethathasanexpectedreturnof149,000 in a share that has an expected return of 14%, and 16,000 in another share with an expected return of 7%. What is the expected return on your share portfolio?

Group of answer choices

14%

21%

14.875%

9.52%

39.76%

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Solution

To calculate the expected return on your share portfolio, you need to find the weighted average of the expected returns of the individual shares. Here's how you do it:

  1. Multiply the amount invested in each share by its expected return to find the total return for each share. For the first share: 9,000∗149,000 * 14% = 1,260 For the second share: 16,000∗716,000 * 7% = 1,120

  2. Add these total returns together to find the total return for the portfolio. 1,260+1,260 + 1,120 = $2,380

  3. Add the amounts invested in each share to find the total amount invested. 9,000+9,000 + 16,000 = $25,000

  4. Divide the total return by the total amount invested and multiply by 100 to find the expected return as a percentage. (2,380/2,380 / 25,000) * 100 = 9.52%

So, the expected return on your share portfolio is 9.52%.

This problem has been solved

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