Unformatted text preview: of n stocks is:
n (28) Portfolio return ¦w r ii i1 Where wi denotes the fraction of the portfolio invested in stock i and r i is the expected return on stock i.
- Suppose you invest 50% of your portfolio in Nokia and 50% in Nestlé. The
expected return on your Nokia stock is 15% while Nestlé offers 10%. What is the
expected return on your portfolio? - Portfolio return n ¦w r ii 0.5 15% 0.5 10% 12.5% i1 - A portfolio with 50% invested in Nokia and 50% in Nestlé has an expected return
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