An investor invests $4,000 to buy 200 shares of sand corporation, which has an expected return of 24%; $2,000 to buy 100 shares of water corporation, with an expected return of 18%; and $4,000 to buy 400 shares in beach corporation, with an expected return of 28%. what is the expected return on this portfolio?

Expected return = 28%

Explanation:

given data

invests $4,000

share = 200

return = 24%

and

invests = $2000

share = 100

return = 18%

and

invest = $4,000

share = 400

return = 28%

to find out

expected return on this portfolio

solution

we know total investment is

Total investment = 4000+2000+4000

Total investment = 10000

and

Wt. of Sand Corporation shares in the total portfolio= =  0.4

Wt. of Water Corporation shares in the total portfolio= =  0.2

Wt. of Beach Corporation shares in the total portfolio= =  0.4

and

Expected return on the given portfolio is

Expected return = 0.4 × 24% + 0.4 × 18% + 0.4 × 28%

Expected return = 28%

cognitive overload: having a lot on your mind impairs decision-making and tends to result in the simplest, but not necessarily best, option being selected.

empathy gaps: overlooking how you might feel in a different situation can result in unnecessary purchases, such as overbuying when shopping for food on an empty stomach.

optimism and overconfidence: wearing rose-tinted glasses and having unrealistic expectations about the future can affect money management and leave you unprepared for a change in circumstance.

instant gratification: seeking instant gratification drives impulsive spending and can undermine long-term planning and savings.

harmful habits: automatic or mindless behaviour can amplify a poor financial decision as it becomes a recurring event.

social norms: we are heavily influenced by the actions of others; while this can be in certain circumstances, it also contributes to the pressure to keep up with the joneses through conspicuous consumption.

1. avoid them

2. a talk with them

3. ask someone you trust

4. ignore

5. call police