Consider the Following Table with Information on the Weightings and Expected

question 47

Multiple Choice

Consider the following table with information on the weightings and expected returns of two assets held by an FI. $$\begin{array} { | c | c | c | } \hline \text { Loan } i & \text { Weight } i & \text { Expected return } i \\\hline 1 & 0.35 & 12.35 \% \\\hline 2 & 0.65 & 10.25 \% \\\hline\end{array}$$ What is the expected return on the portfolio (round to two decimals) ?

• A)(0.35 + 12.35) - (0.65 + 10.25) = 1.80%
• B)(0.35 + 0.65) * (12.35 + 10.25) = 22.60%
• C)(12.35 + 10.25) / 2 = 11.30%
• D)0.35 * 12.35 + 0.65 * 10.25 = 10.99%

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