You Are Computing the Expected Return on a Portfolio of Six

question 78

Multiple Choice

You are computing the expected return on a portfolio of six stocks given three states of the economy. How will the expected return of the portfolio be computed given an economic state?

• A) Add up the returns on each stock and divide by 6
• B) Sum up the returns on each stock and divide by (6 - 1)
• C) Multiply the individual returns with the weights based on the market value of each of the stock position
• D) Multiply the individual returns with the weights based on the relative prices of each stock position
• E) Multiply the individual returns with the weights based on the number of shares of each stock owned

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