Consider the Following Table with Information on the Weightings and Expected

question 52

Multiple Choice

Consider the following table with information on the weightings and expected returns of three assets held by an FI. $$\begin{array} { | c | c | c | } \hline \text { Loan } i & \text { Weight } i & \text { Expected return } i \\\hline 1 & 0.15 & 12.35 \% \\\hline 2 & 0.55 & 10.25 \% \\\hline 3 & 0.30 & 15.75 \% \\\hline\end{array}$$ What is the expected return on the portfolio (round to two decimals) ?

• A)(0.15 * 12.35 + 0.55 * 10.25 + 0.30 * 15.75) / 3 = 4.07%
• B)(0.15 * 12.35 + 0.55 * 10.25 + 0.30 * 15.75) * 3 = 36.66%
• C)0.15 * 12.35 + 0.55 * 10.25 + 0.30 * 15.75 = 12.22%
• D)(12.35 + 10.25 + 15.75) / 3 = 12.78%

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