The return on a portfolio is a combination of the expected returns on the assets in the portfolio.
Question
The return on a portfolio is a combination of the expected returns on the assets in the portfolio.
Solution
The return on a portfolio is indeed a combination of the expected returns on the assets in the portfolio. Here's a step-by-step explanation:
-
Each asset in a portfolio has an expected return, which is a prediction of the potential gain or loss that the asset will generate. This is usually based on historical data, but can also be influenced by market conditions and other factors.
-
The overall return on the portfolio is calculated by taking a weighted average of the expected returns of the individual assets. The weights are determined by the proportion of the portfolio's total value that each asset represents.
-
For example, if a portfolio contains two assets, one with an expected return of 10% and the other with an expected return of 5%, and each asset makes up 50% of the portfolio's value, the overall expected return on the portfolio would be 7.5% (0.510% + 0.55%).
-
Therefore, the return on a portfolio is a combination of the expected returns on the assets in the portfolio. The more diverse the portfolio (i.e., the more different types of assets it contains), the more factors will influence its overall return.
Similar Questions
rue or false: The expected return of a portfolio is a combination of the weights of each asset in a portfolio.True false question.TrueFalse
For example, if you have a portfolio that is made up of 50% stocks and 50% bonds, and the expected return on stocks is 10%, and the expected return on bonds is 5%, then your expected return would be calculated as:
is the probability of getting return. It is measured in terms of deviation between actual return and expected return.*PortfolioInvestmentReturnDerivativeRisk
_____ returns are the total returns earned by an investor during the time period for which the investment is held.a. Holding periodb. Annualisedc. Expectedd. Future
There are two ways to calculate the expected return of a portfolio. Either calculate the expected return using the value and dividend stream of the portfolio as a whole, or calculate the weighted average of the expected returns of the individual shares that make up the portfolio. Which return is higher? (Select the best choice below.) A. Neither-both calculations give the same answer. B. The weighted average expected return of the individual shares is higher because returns are concave. C. The weighted average expected return of the individual shares is higher because returns are convex. D. Impossible to tell, it depends on the portfolio.
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.