# Expected return on the portfolio

Calculate the expected return on the portfolio. [E (R)] of the following assets. If you invest 20% in asset 1, 30% in asset 2, AND 50% in asset 3.

How and why will your answer change if you shift 20% of invested funds from the least risky asset 3 to the most risky asset 1 asset?

Asset

1. 10%

2. 7%

3. 6%

https://brainmass.com/business/accounting/232330

#### Solution Preview

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Calculate the expected return on the portfolio. [E (R)] of the following assets. If you invest 20% in asset 1, 30% in asset 2, AND 50% in asset 3.

Asset

1. 10%

2. 7%

3. 6%

Expected return = w1 r1 + w2 r2 + w3 r3

where w1, w2 and w3 are proportions invested in 1,2 and 3

and r1, r2 ...

#### Solution Summary

Calculates expected return on a portfolio composed of 3 assets.

$2.19