You Have a Portfolio Which Is Comprised of 75 Percent

question 12

Multiple Choice

You have a portfolio which is comprised of 75 percent of stock A and 25 percent of stock B.What is the expected rate of return on this portfolio?

• A)10.70 percent
• B)10.87 percent
• C)11.13 percent
• D)12.11 percent
• E) 12.80 percent

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Definitions:

Flexible Budget

A budget that adjusts or varies with changes in volume, activity, or other relevant factors.

Responsibility Accounting

A system of accounting that involves assigning revenues and costs to the managers responsible for their incurrence, promoting accountability.

Average Month

A concept used to calculate the average results or performance over several months, smoothing out fluctuations.

Return on Investment

A financial metric measuring the profitability of an investment, calculated as net profit divided by the cost of the investment.