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    Expected Rate of Return

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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. 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%

    © BrainMass Inc. brainmass.com March 4, 2021, 7:58 pm ad1c9bdddf

    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