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# Rate of Return-Investment Theory

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Scenario:
Roger has just been hired as chief portfolio officer of Bear United Capital. As part of this new position, he has been asked to assemble a model portfolio from a set of assets. The assets in the model portfolio include the following:

Please see attached word document for data set.

Using the above assets from the model portfolio and their associated values, calculate the following:
-The rate of return of the portfolio
-The expected rate of return on the portfolio
-Discuss your perception of the two returns and what is driving each in detail
-Which return is a better measure of return on a portfolio, and when should you use each?

#### Solution Preview

Please see attachment for complete solution.

Roger has just been hired as chief portfolio officer of Bear United Capital. As part of this new position, he has been asked to assemble a model portfolio from a set of assets. The assets in the model portfolio include the following:
Weight Expected Return Actual Return
Stock A 0.2 0.05 0.09
Stock B 0.1 0.07 0.04
Stock C 0.25 0.12 0.14
Stock D 0.05 0.02 0.04
Stock E 0.1 0.04 0.01
Stock F 0.3 0.35 -0.02

Using the above assets from the model portfolio and their associated values, calculate the following:
• The rate of return of the portfolio
Weight Actual Return Weighted Return - ...

#### Solution Summary

The rate of return-investment theories are examined.

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