Calculating expected 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%.
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Solution Summary
Solution describes the steps for calculating expected portfolio return in the given ratios. It also calculates the expected return if there is a change in ratios.
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Solution:
Expected return = allocation in asset 1*return on asset1+allocation in asset 2*return on ...
Education
- BEng (Hons) , Birla Institute of Technology and Science, India
- MSc (Hons) , Birla Institute of Technology and Science, India
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