Question

Calculate the expected return with the help of following data: p=.3 r=30%, p=.4 r= 16%, p=.3 r=8%
• 17.8
• 18
• 5.8
• 7.35



plz answer with explanation

thanks in advance

Answer 1

Answer:

p is the proportion or simply portion, and r is rate of return on a single investment type.

Three investments and their portions are given in a portion with their portion percentage and return respectively.

To calculate return rate of a portfolio of three investments, multiply rate of return with proportion.

See,

(0.3 X 30%) + (0.4 X 16%) + (0.3 X 8%) = 0.178 or 17.8%

Answer 2

The expected Rate of Return is 17.8%

GIVEN: p=.3 r=30%, p=.4 r= 16%, p=.3 r=8%
TO FIND Expected Rate of Return.
SOLUTION:

As we are given in the question,

p=.3

r=30%

p=.4

r= 16%

p=.3

r=8%

The three investments and their portion rate of return
As we know,

P here represents the proportion.

R represents the rate of return on a single investment type.

To find the expected return rate of a portfolio on the given three investments,

We may multiply the rate of return by proportion.

(0.3 X 30%) + (0.4 X 16%) + (0.3 X 8%)

= 0.3 * 30/100 + 0.4 * 16/100 + 0.3 * 8/100

= 0.178

= 17.8%

Therefore, the expected rate of return is 17.8%

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