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:

1. 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.

2. 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.

3. 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% (0.5*10% + 0.5*5%).

4. 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.

Question

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:

1. 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.

2. 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.

3. 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% (0.5*10% + 0.5*5%).

4. 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.

Knowee AI · Accepted Answer

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:

1. 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.

2. 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.

3. 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% (0.5*10% + 0.5*5%).

4. 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.

The return on a portfolio is a combination of the expected returns on the assets in the portfolio.

Question

Solution

Similar Questions

Upgrade your grade with Knowee