# Expected Rate of Return

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 Return

1 10%

2 7%

3 6%

https://brainmass.com/business/modified-internal-rate-of-return/expected-rate-of-return-134862

#### Solution Preview

Expected Return = Sum (Proportion X Return)

Expected Return = 0.2X10% + 0.3X7% + 0.5X6%

Expected Return = 7.1%

If ...

#### Solution Summary

The solution explains how to calculate the expected rate of return on a portfolio

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