The Expected Rate of Return of a Portfolio of Risky

question 61

Multiple Choice

The expected rate of return of a portfolio of risky securities is ________.

• A) the sum of the securities' covariance
• B) the sum of the securities' variance
• C) the weighted sum of the securities' expected returns
• D) the weighted sum of the securities' variance

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Definitions:

Portfolio

A blend of financial contributions, featuring stocks, bonds, market commodities, ready money, and equivalents of cash, comprising also mutual funds and ETFs.

Stocks

Shares of ownership in a corporation or financial asset, which represent a claim on the company's earnings and assets.

Investment

Allocation of resources, such as time, money, or effort, in the expectation of generating a future benefit or return.

Composed

Implies being made up of multiple parts or elements; in the context of data, it may refer to a dataset composed of different types of information.