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Year-to-date, Yum Brands had earned a 3.80 percent return. During the same time period, Raytheon earned 4.26 percent and Coca-Cola earned −0.46 percent. If you have a portfolio made up of 30 percent Yum Brands, 30 percent Raytheon, and 40 percent Coca-Cola, what is your portfolio return?

Respuesta :

Shahzaibfaraz

Answer:

The portfolio return is 2.234%

Explanation:

The portfolio return is a function of the weighted average of individual stock returns that form up the portfolio.

The portfolio return can be calculated as follows,

return of Portfolio = wA * rA + wB * rB + ... + wN * rN

Where,

  • w represents the weighatge of investment in a stock as a proportion  of total investment in portfolio
  • r is the return of the stock

Return of portfolio = 0.038 * 0.3  +  0.0426 * 0.3  +  (-0.0046) * 0.4

Return of Portfolio = 0.02234 or 2.234%

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