What Is the Expected Return of an Equally Weighted Portfolio

question 1

Multiple Choice

What is the expected return of an equally weighted portfolio comprised of the following three stocks?

• A)16.33 percent
• B)18.60 percent
• C)19.67 percent
• D)20.48 percent
• E)21.33 percent

---

Definitions:

Bonus Payable

A liability account on the balance sheet that represents the amount of bonuses a company owes to its employees but has not yet paid.

Warranty Expense

refers to the cost that a company expects to incur to repair, replace, or compensate for goods or services that are under warranty, recognized as a liability and expense in the financial statements.

Defective Parts

Components of a product that fail to meet quality standards or are damaged, requiring repair or replacement.

Warranty Expense

The estimated cost related to the future servicing of products sold that is recognized as an expense by a company.