4. Portfolio expected return and risk Aa Aa A collection of financial assets and securities is referred to as a portfolio. Most individuals and institutions invest in a portfolio, making portfolio...

Extracted text: 4. Portfolio expected return and risk Aa Aa A collection of financial assets and securities is referred to as a portfolio. Most individuals and institutions invest in a portfolio, making portfolio risk analysis an integral part of the field of finance. Just like stand-alone assets and securities, portfolios are also exposed to risk. Portfolio risk refers to the possibility that an investment portfolio will not generate the investor's expected rate of retum. Analyzing portfolio risk and return invalves the understanding of expected returns from a portfolio. Consider the following case: Andre is an amateur investor who holds a small portfolio consisting of only four stocks. The stock holdings in his portfolio are shown in the following table: Percentage of Expected standard stock Portfolio Return Deviation Artemis Inc. 20% 8.00% 27.00% Babish & Co. 30% 14.00% 31.00% Cornell Industries 35% 11.00% 34.00% Danforth Motors 15% 5.00% 36.00% what is the expected retum on Andre's stock portfolio? 15.60% 14.04% 7.80% 10.40%