{"id":59356,"date":"2024-04-16T01:35:46","date_gmt":"2024-04-16T01:35:46","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=59356"},"modified":"2024-04-16T01:35:46","modified_gmt":"2024-04-16T01:35:46","slug":"which-of-the-following-is-true-regarding-the-expected-return-of-a-portfolio","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/which-of-the-following-is-true-regarding-the-expected-return-of-a-portfolio\/","title":{"rendered":"Which of the following is true regarding the expected return of a portfolio?"},"content":{"rendered":"<p>\r\n    <!-- Check if it's an AMP page -->\r\n            <!-- Non-AMP version -->\r\n        <div class=\"mcq-container\" data-quiz-id=\"quizState_6a96f70335802\">\r\n                                            <div class=\"option\" data-option-key=\"option1\" data-is-correct=\"false\">\r\n                    It is a weighted average only for stock portfolios                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option2\" data-is-correct=\"false\">\r\n                    It can only be positive                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option3\" data-is-correct=\"false\">\r\n                    It can never be above the highest individual return                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option4\" data-is-correct=\"true\">\r\n                    All of the above are true                <\/div>\r\n                            \r\n            <!-- Feedback messages for non-AMP -->\r\n            <div class=\"feedback\" data-feedback=\"wrong\">Answer is Right!<\/div>\r\n            <div class=\"feedback\" data-feedback=\"right\">Answer is Wrong!<\/div>\r\n        <\/div>\r\n\r\n        <script>\r\n        document.addEventListener('DOMContentLoaded', function () {\r\n            var containers = document.querySelectorAll('.mcq-container');\r\n\r\n            containers.forEach(function(container) {\r\n                var options = container.querySelectorAll('.option');\r\n                var feedbackSelect = container.querySelector('[data-feedback=\"select\"]');\r\n                var feedbackWrong = container.querySelector('[data-feedback=\"wrong\"]');\r\n                var feedbackRight = container.querySelector('[data-feedback=\"right\"]');\r\n\r\n                options.forEach(function(option) {\r\n                    option.addEventListener('click', function() {\r\n                        var selectedOption = option.getAttribute('data-option-key');\r\n                        var isCorrect = option.getAttribute('data-is-correct') === 'true';\r\n\r\n                        \/\/ Remove previous selections\r\n                        options.forEach(function(opt) {\r\n                            opt.classList.remove('correct', 'incorrect');\r\n                        });\r\n\r\n                        \/\/ Add the correct\/incorrect class\r\n                        if (isCorrect) {\r\n                            option.classList.add('correct');\r\n                            feedbackRight.hidden = false;\r\n                            feedbackWrong.hidden = true;\r\n                        } else {\r\n                            option.classList.add('incorrect');\r\n                            feedbackRight.hidden = true;\r\n                            feedbackWrong.hidden = false;\r\n                        }\r\n\r\n                        \/\/ Hide select feedback\r\n                        feedbackSelect.hidden = true;\r\n                    });\r\n                });\r\n            });\r\n        });\r\n        <\/script>\r\n    \r\n    <!--more--><\/p>\n<p>The correct answer is: <strong>D. All of the above are true.<\/strong><\/p>\n<p>The expected return of a portfolio is a weighted average of the expected returns of the individual assets in the portfolio. The weights are determined by the portfolio&#8217;s asset allocation. The expected return of a portfolio can only be positive if the expected returns of the individual assets in the portfolio are all positive. The expected return of a portfolio can never be above the highest individual return in the portfolio.<\/p>\n<p>Here is a more detailed explanation of each option:<\/p>\n<ul>\n<li>Option A: The expected return of a portfolio is a weighted average of the expected returns of the individual assets in the portfolio. The weights are determined by the portfolio&#8217;s asset allocation. For example, if a portfolio is <div class=\"youtube-subscribe-container\">\r\n        <a href=\"https:\/\/www.youtube.com\/channel\/UCNHT8lW-JmLC68rjBfZhdkg?sub_confirmation=1\" target=\"_blank\" class=\"youtube-subscribe-button\">\r\n            <span class=\"youtube-icon\">\r\n                <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 576 512\">\r\n                    <path d=\"M549.7 124.1c-6.3-23.7-24.8-42.3-48.3-48.6C458.8 64 288 64 288 64S117.2 64 74.6 75.5c-23.5 6.3-42 24.9-48.3 48.6-11.4 42.9-11.4 132.3-11.4 132.3s0 89.4 11.4 132.3c6.3 23.7 24.8 41.5 48.3 47.8C117.2 448 288 448 288 448s170.8 0 213.4-11.5c23.5-6.3 42-24.2 48.3-47.8 11.4-42.9 11.4-132.3 11.4-132.3s0-89.4-11.4-132.3zm-317.5 213.5V175.2l142.7 81.2-142.7 81.2z\"\/>\r\n                <\/svg>\r\n            <\/span>\r\n            Subscribe on YouTube\r\n        <\/a>\r\n    <\/div> 50% invested in stocks and 50% invested in bonds, the expected return of the portfolio will be the weighted average of the expected returns of stocks and bonds. The weights are determined by the portfolio&#8217;s asset allocation. If the <div class=\"telegram-channel-container\">\r\n        <a href=\"https:\/\/t.me\/pscnotes2025\" target=\"_blank\" class=\"telegram-channel-button\">\r\n            <span class=\"telegram-icon\">\r\n                <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 496 512\">\r\n                    <path fill=\"white\" d=\"M248,8C111,8,0,119,0,256s111,248,248,248s248-111,248-248S385,8,248,8z M362,177L320,367c-3,14-10,18-20,14l-56-41l-27,26 c-3,3-5,5-10,5l4-63L323,196c5-5-1-7-8-3l-98,62l-42-13c-9-3-10-9,2-14l162-63C351,160,365,164,362,177z\"\/>\r\n                <\/svg>\r\n            <\/span>\r\n            Join Our Telegram Channel\r\n        <\/a>\r\n    <\/div> portfolio is 50% invested in stocks and 50% invested in bonds, the weights would be 0.5 and 0.5, respectively.<\/li>\n<li>Option B: The expected return of a portfolio can only be positive if the expected returns of the individual assets in the portfolio are all positive. This is because the expected return of a portfolio is a weighted average of the expected returns of the individual assets in the portfolio. If any of the expected returns of the individual assets are negative, the expected return of the portfolio will also be negative.<\/li>\n<li>Option C: The expected return of a portfolio can never be above the highest individual return in the portfolio. This is because the expected return of a portfolio is a weighted average of the expected returns of the individual assets in the portfolio. The weights are determined by the portfolio&#8217;s asset allocation. If the portfolio is 50% invested in stocks and 50% invested in bonds, the expected return of the portfolio will be the weighted average of the expected returns of stocks and bonds. The weights are determined by the portfolio&#8217;s asset allocation. If the portfolio is 50% invested in stocks and 50% invested in bonds, the weights would be 0.5 and 0.5, respectively. The expected return of the portfolio cannot be above the highest individual return in the portfolio, which is the expected return of stocks.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Subscribe on YouTube<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[945],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Which of the following is true regarding the expected return of a portfolio?<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/which-of-the-following-is-true-regarding-the-expected-return-of-a-portfolio\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" 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