Given the Following Information, Calculate the Expected Return of Portfolio

question 60

Essay

Given the following information, calculate the expected return of Portfolio ABC. Expected return of stock A = 10%; expected return of stock B = 15%; expected return of stock C = 6%. 40 percent of the portfolio is invested in A, 40 percent is invested in B and 20 percent is invested in C.

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Definitions:

Budget Surplus

An excess of tax revenue over government spending

Loanable Funds

The resources available for borrowing in the financial markets, comprising savings and any other available funds.

National Saving

The total amount of savings generated within a country, including both private savings by individuals and businesses, and public savings from government budgets.

Net Capital Outflow

The variance between the act of local inhabitants investing overseas and international investors buying within the country.