CFA Practice Question

There are 410 practice questions for this study session.

CFA Practice Question

Assume that we have 3 assets in a portfolio, the respective market values of which are $100, $400, and $500. Suppose also that E(R1) = 2%, E(R2) = 4%, and E(R3) = 6%. The whole portfolio has a market value of $1000. Determine the expected return of the portfolio.
A. $16
B. $30
C. $48
Explanation: Since the whole portfolio has a market value of $1000, the respective weights would be:

W1 = 100 / 1000 = 0.1
W2 = 400 / 1000 = 0.4
W3 = 500 / 1000 = 0.5

E(Rp) = 0.1 x 1000 x 2% + 0.4 x 1000 x 4% + 0.5 x 1000 x 6% = $48

User Contributed Comments 1

User Comment
arsand This should not even be in the medium category
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