Year-to-date, Oracle had earned a −1.53 percent return. During the same time period, Valero Energy earned 8.07 percent and McDonald's earned 0.70 percent. If you have a portfolio made up of 25 percent Oracle, 30 percent Valero Energy, and 45 percent McDonald's, what is your portfolio return?

The portfolio return is 2.35%

Explanation:

The portfolio return is the weighted average of the individual stock returns that form up the portfolio. The weightage of each stock is the investment in each stock as a percentage of total investment in the portfolio. The return of a three stock portfolio can be calculated using the following formula,

rP = rA * wA  +  rB * wB  +  rC * wC

Where,

rP = -1.53% * 0.25 + 8.07% * 0.3 + 0.7% * 0.45  

rP = 0.023535 or 2.3535% rounded off to 2.35%

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