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stock a has a standard deviation of 22% and an expected return of 12%. stock b has a standard deviation of 25% and an expected return of 10%. jami's fund is a simple investment product that consists of 40% stock a and 60% stock b. calculate the expected return of jami's fund. choose the best answer.

Respuesta :

The expected return on Jami's fund which includes stock A and stock B will be 6.048 %

Information given

Stock A:

Standard deviation of 22%

Expected return of 12%

Weight = 0.40

Stock B:

standard deviation of 25%

expected return of 10%

Weight = 0.60

Expected return= (stock A weight * expected return) + (Stock b weight *expected return)

= 0.40*0.12 +0.60*0.10

= 6.048%

A stock, also recognized as ownership, is a financial product that represents ownership of a portion of the company that issued. Shares are components of stock that authorizes the holder to a percentage of the company's assets and revenues based on the number of stocks they own.

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