You own a portfolio that is invested 35 percent in Stock X, 20 percent in Stock Y, and 45 percent in Stock Z. The expected returns on these three stocks are 9 percent, 15 percent, and 12 percent, respectively. What is the expected return on the portfolio? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e. g., 32.16.)

Expected return - Portfolio = 0.1155 or 11.55%

Explanation:

The expected return on the portfolio is the weighted average of the expected returns of the individual stocks that form up the portfolio. Thus, the formula for the expected return of the portfolio is,

Expected return - Portfolio = rA * wA  +  rB * wB + ... + rN * wN

Where,

Expected return - Portfolio = 0.09 * 0.35  +  0.15 * 0.2  +  0.12 * 0.45

Expected return - Portfolio = 0.1155 or 11.55%

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