Answer:
6.956%
Explanation:
The expected return, in dollars, is given by the sum of the amount invested multiplied by the rate of returns for both stocks and bonds:
[tex]R = \$4,300*0.020+\$7,000*0.10\\R=\$786[/tex]
The rate of return is:
[tex]r = \frac{\$786}{\$4,300+\$7,000}\\r=0.06956\\r= 6.956\%[/tex]
The portfolio is expected to yield a return of 6.956%.
Answer:
The expected return on the portfolio is 6.96%
Explanation:
The formula to computing the expected return on the portfolio is given as :
(Amount invested in stocks/Total amount of investment)*expected yield on stocks +(Amount invested in bonds/Total amount of investment)* expected yield on bonds
Amount invested in stocks=$4300
Amount invested in bonds=$7000
Total amount of investment($4300+$7000)=$11,300
expected yields on stock =2%
expected yields on bonds=10%
Expected return on the portfolio=($4300/$11300)*2%+($7000/$11300)*10%
Expected return on the portfolio=0.069557522
Approximately 6.96%
