Given the Following Forecasts, What Is the Expected Return for a Portfolio

question 102

Multiple Choice

Given the following forecasts, what is the expected return for a portfolio that has $2,200 invested in Stock X, $3,600 in Stock Y, and $4,200 invested in Stock Z?

• A)10.62%
• B)14.82%
• C)30.50%
• D)33.25%

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Definitions:

Compounded Monthly

Refers to the process of calculating interest on both the initial principal and accrued interest from previous periods on a monthly basis.

Cash Flow Stream

A series of cash inflows and outflows over a period, associated with an investment, project, or business operation.

Interest Rate

The cost of borrowing money or the amount paid for the use of funds, expressed as a percentage of the principal.

Effective Annual Rates

The effective annual rate (EAR) is the actual interest rate that an investment earns due to compounding over a given period, usually one year.