Stock A: 40% of the portfolio, with an expected return of 12% Stock B: 60% of the portfolio, with an expected return of 15%
FV = $500 x (1 + 0.08)^3 = $500 x 1.25971 = $629.86 Ushtrime Te Zgjidhura Investime
An investment generates the following cash flows: Stock A: 40% of the portfolio, with an
Using the future value formula:
Expected Return = (0.40 x 0.12) + (0.60 x 0.15) = 0.048 + 0.09 = 0.138 or 13.8% Stock A: 40% of the portfolio
PV = $1,000 / (1 + 0.10)^5 = $1,000 / 1.61051 = $620.92