Currently, the risk-free return is 3 percent and the expected market rate of return is 10 percent.

Question:

Currently, the risk-free return is 3 percent and the expected market rate of return is 10 percent. What is the expected return of the following three-stock portfolio?

Amount Invested Beta

$400,000 .......... 1.5

500,000 .......... 2.0

100,000 .......... 4.0

Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these...