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Portfolio Expected Return Formula

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Portfolio Expected Return is the weighted average of the expected returns of the individual assets within the portfolio. Check FAQs

ER p = w 1 \cdot (ER 1) + w 2 \cdot (ER 2)

ER_p - Portfolio Expected Return?w₁ - Asset Weight 1?ER₁ - Expected Return on Asset 1?w₂ - Asset Weight 2?ER₂ - Expected Return on Asset 2?

Portfolio Expected Return Example

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Here is how the Portfolio Expected Return equation looks like with Values.

Here is how the Portfolio Expected Return equation looks like with Units.

Here is how the Portfolio Expected Return equation looks like.

0.22 = 0.4 \cdot (0.25) + 0.6 \cdot (0.2)

0.22 = 0.4 \cdot (0.25) + 0.6 \cdot (0.2)

0.22 = 0.4 \cdot (0.25) + 0.6 \cdot (0.2)

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Portfolio Expected Return Solution

Follow our step by step solution on how to calculate Portfolio Expected Return?

FIRST Step Consider the formula

ER p = w 1 \cdot (ER 1) + w 2 \cdot (ER 2)

Next Step Substitute values of Variables

∴

ER p = 0.4 \cdot (0.25) + 0.6 \cdot (0.2)

Next Step Prepare to Evaluate

∴

ER p = 0.4 \cdot (0.25) + 0.6 \cdot (0.2)

LAST Step Evaluate

∴

ER p = 0.22

Portfolio Expected Return Formula Elements

Variables

Portfolio Expected Return

Portfolio Expected Return is the weighted average of the expected returns of the individual assets within the portfolio.

Symbol: ER_p

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Portfolio Expected Return

Asset Weight 1

Asset Weight 1 refers to the proportion of the portfolio's total value that the asset represents.

Symbol: w₁

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Asset Weight 1

Expected Return on Asset 1

Expected Return on Asset 1 is the anticipated return that an investor can expect to receive from holding that asset over a certain period.

Symbol: ER₁

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Expected Return on Asset 1

Asset Weight 2

Asset Weight 2 refers to the proportion of the portfolio's total value that the asset represents.

Symbol: w₂

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Asset Weight 2

Expected Return on Asset 2

Expected Return on Asset 2 is the anticipated return that an investor can expect to receive from holding that asset over a certain period.

Symbol: ER₂

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Expected Return on Asset 2

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How to Evaluate Portfolio Expected Return?

Portfolio Expected Return evaluator uses Portfolio Expected Return = Asset Weight 1*(Expected Return on Asset 1)+Asset Weight 2*(Expected Return on Asset 2) to evaluate the Portfolio Expected Return, The Portfolio Expected Return formula is defined as the weighted average of the expected returns of the individual assets in the portfolio. Portfolio Expected Return is denoted by ER_p symbol.

How to evaluate Portfolio Expected Return using this online evaluator? To use this online evaluator for Portfolio Expected Return, enter Asset Weight 1 (w₁), Expected Return on Asset 1 (ER₁), Asset Weight 2 (w₂) & Expected Return on Asset 2 (ER₂) and hit the calculate button.

FAQs on Portfolio Expected Return

What is the formula to find Portfolio Expected Return?

The formula of Portfolio Expected Return is expressed as Portfolio Expected Return = Asset Weight 1*(Expected Return on Asset 1)+Asset Weight 2*(Expected Return on Asset 2). Here is an example- 0.22 = 0.4*(0.25)+0.6*(0.2).

How to calculate Portfolio Expected Return?

With Asset Weight 1 (w₁), Expected Return on Asset 1 (ER₁), Asset Weight 2 (w₂) & Expected Return on Asset 2 (ER₂) we can find Portfolio Expected Return using the formula - Portfolio Expected Return = Asset Weight 1*(Expected Return on Asset 1)+Asset Weight 2*(Expected Return on Asset 2).

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Portfolio Expected Return Formula

Portfolio Expected Return Example

Portfolio Expected Return Solution

Portfolio Expected Return Formula Elements

Other formulas in Investment category

How to Evaluate Portfolio Expected Return?

FAQs on Portfolio Expected Return

Variable Name