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Your Portfolio Consists of $3000 in ABC Shares, $4500 of DEF

question 49

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Your portfolio consists of $3000 in ABC shares, $4500 of DEF shares and $2500 of GHI shares.Expected rates of return are ABC 5%, DEF 12% and GHI 16%.What is the portfolio expected rate of return?


Definitions:

Cost Of Capital

The average rate of return a company must pay to its long-term creditors and shareholders for the use of their funds.

Discounted Cash Flow

A valuation method used to estimate the value of an investment based on its expected future cash flows, adjusted for the time value of money.

Initial Investment

Initial investment refers to the amount of money initially laid out for an investment project or venture.

Profitability Index

The present value of a project’s cash inflows divided by the investment required.

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