## Portfolio Expected Return Solution

STEP 0: Pre-Calculation Summary
Formula Used
Portfolio Expected Return = Asset Weight*(Expected Return on Asset 1)+Asset Weight*(Expected Return on Asset 2)
ERp = w1*(ER1)+w2*(ER2)
This formula uses 5 Variables
Variables Used
Portfolio Expected Return - Portfolio Expected Return is the weighted average of the expected returns of the individual assets within the portfolio.
Asset Weight - Asset Weight refers to the proportion of the portfolio's total value that the asset represents.
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.
Asset Weight - Asset Weight refers to the proportion of the portfolio's total value that the asset represents.
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.
STEP 1: Convert Input(s) to Base Unit
Asset Weight: 0.4 --> No Conversion Required
Expected Return on Asset 1: 0.25 --> No Conversion Required
Asset Weight: 0.6 --> No Conversion Required
Expected Return on Asset 2: 0.2 --> No Conversion Required
STEP 2: Evaluate Formula
Substituting Input Values in Formula
ERp = w1*(ER1)+w2*(ER2) --> 0.4*(0.25)+0.6*(0.2)
Evaluating ... ...
ERp = 0.22
STEP 3: Convert Result to Output's Unit
0.22 --> No Conversion Required
0.22 <-- Portfolio Expected Return
(Calculation completed in 00.004 seconds)
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## Credits

Created by Vishnu K
BMS College of Engineering (BMSCE), Bangalore
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Satyawati College (DU), New Delhi
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## < 24 Investment Calculators

Portfolio Standard Deviation
Portfolio Standard Deviation = sqrt((Asset Weight)^2*Variance of Returns on Assets 1^2+(Asset Weight)^2*Variance of Returns on Assets 2^2+2*(Asset Weight*Asset Weight*Variance of Returns on Assets 1*Variance of Returns on Assets 2*Portfolio Correlation Coefficient))
Portfolio Variance
Portfolio Variance = (Asset Weight)^2*Variance of Returns on Assets 1^2+(Asset Weight)^2*Variance of Returns on Assets 2^2+2*(Asset Weight*Asset Weight*Variance of Returns on Assets 1*Variance of Returns on Assets 2*Portfolio Correlation Coefficient)
Jensen's Alpha
Jensen's Alpha or Alpha = Annual Return on Investment-(Risk Free Interest Rate+Beta of the Portfolio*(Annual return of the market benchmark-Risk Free Interest Rate))
Compound Interest
Future Value of Investment = Principal Investment Amount*(1+(Annual Interest Rate/Number of Periods))^(Number of Periods*Number of Years Money is Invested)
Certificate of Deposit
Certificate of Deposit = Initial Deposit Amount*(1+(Annual Nominal Interest Rate/Compounding Periods))^(Compounding Periods*Number of Years)
Actuarial Method Unearned Interest Loan
Actuarial Method Unearned Interest Loan = (Number of Remaining Monthly Payments*Monthly Payment*Annual Percentage Rate)/(100+Annual Percentage Rate)
Equivalent Annual Annuity
Equivalent Annuity Cashflow = (Rate per Period*(Net Present Value (NPV)))/(1-(1+Rate per Period)^-Number of Periods)
Portfolio Expected Return
Portfolio Expected Return = Asset Weight*(Expected Return on Asset 1)+Asset Weight*(Expected Return on Asset 2)
Total Stock Return
Total Stock Return = ((Ending Stock Price-Initial Stock Price)+Dividend)/Initial Stock Price
Annuity Payment
Annuity Payment = (Rate per Period*Present Value)/(1-(1+Rate per Period)^-Number of Periods)
Value at Risk
Value at Risk = -Mean of Profit and Loss+Standard Deviation of Profit and Loss*Standard Normal Variate
Profitability Index
Profitability Index (PI) = (Net Present Value (NPV)+Initial Investment)/Initial Investment
Sharpe Ratio
Sharpe Ratio = (Expected Portfolio Return-Risk Free Rate)/Portfolio Standard Deviation
Capital Gains Yield
Capital Gains Yield = (Current Stock Price-Initial Stock Price)/Initial Stock Price
Treynor Ratio
Treynor's Ratio = (Expected Portfolio Return-Risk Free Rate)/Beta of the Portfolio
Information Ratio
Information Ratio = (Portfolio Return-Benchmark Return)/Tracking Error
Rate of Return
Rate of Return = ((Current Value-Original Value)/Original Value)*100
Straight Line Depreciation
Straight Line Depreciation = (Asset's Cost-Salvage)/Life
Portfolio Turnover Rate
Porfolio Turnover Rate = (Total Sales and Purchases of Shares/Average Net Assets)*100
Real Rate of Return
Real Rate of Return = ((1+Nominal Rate)/(1+Inflation Rate))-1
Risk Premium = Return on Investment (ROI)-Risk Free Return
PV of Perpetuity
PV of Perpetuity = Dividend/Discount Rate
Doubling Time (Simple Interest)
Doubling Time Simple Interest = 100/Annual Interest Rate
Rule of 72
Rule of 72 = 72/Rate of Interest as Whole Number

## Portfolio Expected Return Formula

Portfolio Expected Return = Asset Weight*(Expected Return on Asset 1)+Asset Weight*(Expected Return on Asset 2)
ERp = w1*(ER1)+w2*(ER2)

## What is Portfolio Expected Return?

The expected return of a portfolio is the weighted average of the expected returns of the individual assets in the portfolio. To calculate it, you multiply the expected return of each asset by its weight in the portfolio and sum up these values for all assets in the portfolio.
Where w1, w2 are the respective weights for the two assets, and E(R1), E(R2) are the respective expected returns.
Levels of variance translate directly with levels of risk; higher variance means higher levels of risk and vice versa. The variance of a portfolio is not just the weighted average of the variance of in

## How to Calculate Portfolio Expected Return?

Portfolio Expected Return calculator uses Portfolio Expected Return = Asset Weight*(Expected Return on Asset 1)+Asset Weight*(Expected Return on Asset 2) to calculate 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 ERp symbol.

How to calculate Portfolio Expected Return using this online calculator? To use this online calculator for Portfolio Expected Return, enter Asset Weight (w1), Expected Return on Asset 1 (ER1), Asset Weight (w2) & Expected Return on Asset 2 (ER2) and hit the calculate button. Here is how the Portfolio Expected Return calculation can be explained with given input values -> 0.22 = 0.4*(0.25)+0.6*(0.2).

### FAQ

What is 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 and is represented as ERp = w1*(ER1)+w2*(ER2) or Portfolio Expected Return = Asset Weight*(Expected Return on Asset 1)+Asset Weight*(Expected Return on Asset 2). Asset Weight refers to the proportion of the portfolio's total value that the asset represents, Expected Return on Asset 1 is the anticipated return that an investor can expect to receive from holding that asset over a certain period, Asset Weight refers to the proportion of the portfolio's total value that the asset represents & Expected Return on Asset 2 is the anticipated return that an investor can expect to receive from holding that asset over a certain period.
How to calculate 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 is calculated using Portfolio Expected Return = Asset Weight*(Expected Return on Asset 1)+Asset Weight*(Expected Return on Asset 2). To calculate Portfolio Expected Return, you need Asset Weight (w1), Expected Return on Asset 1 (ER1), Asset Weight (w2) & Expected Return on Asset 2 (ER2). With our tool, you need to enter the respective value for Asset Weight, Expected Return on Asset 1, Asset Weight & Expected Return on Asset 2 and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.
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