Assume That You Have $200,000 Invested in a Stock That

question 39

Multiple Choice

Assume that you have $200,000 invested in a stock that is returning 14%,$300,000 invested in a stock that is returning 18%,and $400,000 invested in a stock that is returning 15%.What is the expected return of your portfolio?

• A) 13.25%
• B) 14.97%
• C) 15.67%
• D) 15.78%

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Definitions:

Base Rate

The minimum interest rate set by a central bank, which serves as a benchmark for banks and other lenders when setting their interest rates.

Risk Premium

The extra return above the risk-free rate that investors require as compensation for the risk of an investment.

Maturity Structure

The categorization of a company's or government's debt based on the lengths of time until those debts are due or mature.

Interest Rates

The fraction of a total amount of money that is levied as a fee for borrowing it, signifying the expense of taking out a loan or the earnings from putting money into savings.