What Is the Expected Return of the Three Stock Portfolio

question 85

Multiple Choice

What is the expected return of the three stock portfolio described below?

• A)21.33%
• B)12.50%
• C)32.00%
• D)15.75%
• E)16.80%

---

Definitions:

Fixed Manufacturing Overhead Standards

Pre-determined benchmarks for the fixed costs involved in the production process, not varying with the level of output.

Budgeted Fixed Manufacturing Overhead

The estimated fixed costs involved in manufacturing that do not change with the level of production or sales volume.

Standard Cost System

A cost accounting system that assigns fixed costs to products based on predefined standards, facilitating budgeting and variance analysis.

Net Operating Income

The profit a business makes after deducting operating costs, but before removing interest and tax expenses.