[Madhu Chandarasekaran, CFAKeymaster]

This is a leveraged portfolio return question, so the Return of the portfolio is given by the formula:

Rp = w1*Rb +(1-w1)*Rm

w1 = -0.6 | Rb = 0.04 | Rm = 0.11

=(-0.6*0.04) + (1.6 * 0.11)   = -0.0

This is a leveraged portfolio return question, so the Return of the portfolio is given by the formula:

Rp = w1*Rb +(1-w1)*Rm

w1 = -0.6 | Rb = 0.04 | Rm = 0.11

=(-0.6*0.04) + (1.6 * 0.11)   = -0.024 + 0.176  = 0.152 = 15.2%

 

Hope this Helps.

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