Math Problem Statement

You have a portfolio worth $91,000 that has an expected return of 11.4 percent. The portfolio has $18,000 invested in Stock O, $25,800 invested in Stock P, with the remainder in Stock Q. The expected return on Stock O is 15.7 percent and the expected return on Stock P is 12 percent. What is the expected return on Stock Q?

Multiple Choice

9.43%

11.40%

10.05%

10.75%

13.17%

Solution

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Math Problem Analysis

Mathematical Concepts

Weighted Average
Portfolio Expected Return
Algebra

Formulas

Portfolio Expected Return = (Weight of Stock O * Return of Stock O) + (Weight of Stock P * Return of Stock P) + (Weight of Stock Q * Return of Stock Q)
Weight of Stock = Investment in Stock / Total Portfolio Value

Theorems

Weighted Average Theorem

Suitable Grade Level

College Level / Finance and Investment Students

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