- CFA Exams
- CFA Exam: Level I 2021
- Study Session 2. Quantitative Methods (1)
- Reading 8. Probability Concepts
- Subject 8. Portfolio Expected Return and Variance

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**CFA Practice Question**

Assume a portfolio composed of 25% stocks (S) and 75% bonds (B). The expected return from stocks is 7.9% and the expected return from bonds is 4.5%. What is the expected return of this portfolio?

B. 5.35%

C. 6.32%

A. 3.38%

B. 5.35%

C. 6.32%

Correct Answer: B

The expected return for this portfolio is E(R) = 0.25 x 7.9 + 0.75 x 4.5 = 5.35%.

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