What Is the Expected Return of the Three-Stock Portfolio Described

question 35

Multiple Choice

What is the expected return of the three-stock portfolio described below? $\begin{array}{lcc}\text { Common Stock } & \text { Market Value } & \text { Expected Return } \\\hline \text { Ando Inc. } & 95,000 & 12.0 \% \\\text { Bee Co. } & 32,000 & 8.75 \% \\\text { Cool Inc. } & 65,000 & 17.7 \%\end{array}$

• A) 18.45%
• B) 12.82%
• C) 13.38%
• D) 15.27%
• E) 16.67%

---

Definitions:

Simple Interest

Interest calculated on the principal sum only, not compounding on earned interest, typically over a period of time.

Savings Account

A bank account that earns interest over time, designed for the deposit of funds not intended for immediate use.

Discounted

The reduction applied to the face value or current price of an item or financial instrument, taking into account factors such as time, interest rate, and risk.

Rate of Return

The profit or deficit from an investment during a certain timeframe, represented as a portion of the investment's starting price in percentage terms.