Year to date, Company Y had earned a 6.2 percent return. During the same time period, Company R earned 10.05 percent and Company C earned -1.45 percent.

Portfolio Return Year to date, Company Y had earned a 6.2 percent return. During the same time period, Company R earned 10.05 percent and Company C earned -1.45 percent. If you have a portfolio made up of 35 percent Y, 40 percent R, and 25 percent C, what is your portfolio return?

 

Solution

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Weight of Stock Y = 35%
Weight of Stock R = 40%
Weight of Stock C = 25%

Return on Stock Y = 6.2%
Return on Stock R = 10.05%
Return on Stock C = -1.45%

Portfolio Return = Weight of Stock Y*Return on Stock Y + Weight of Stock R*Return on Stock R + Weight of Stock C*Return on Stock C
Portfolio Return = 35% * 6.2% + 40% * 10.05% + 25% * (-1.45%)
Portfolio Return = 5.8275%