Homework SourseThe following are the expected returns on a portfolio of inv
The following are the expected returns on a portfolio of investments. What is the expected rate of return on the portfolio?
investment # of shares price per share expected return
a. 2000 $20 10%
b. 3000 $10 15%
c. 1000 $15 8%
Type your formula and solve in the cell below (for excel) please show formula and answer
Solution
Solution:
In statistics, a weighted average is an average that takes each object and calculates the product of its weight and its figure and sums all of these products to produce one average. It is implied that all the individual weights add to 1.
| investment | # of shares | price per share | expected return | weight of shares | Expected return decimal equivalent | expected return |
| a | 2000 | $20 | 10% | 0.333333333 | 0.1 | 0.0333333 |
| b | 3000 | $10 | 15% | 0.5 | 0.15 | 0.075 |
| c | 1000 | $15 | 8% | 0.166666667 | 0.08 | 0.0133333 |
| 6000 | 0.1216667 |
