(5 points) Assume we have a simple portfolio of two mutual funds, one invested in bonds and the other invested in stocks. Lets further assume that we expect a stock return of 8% and a bond return of 6% and our allocation is 60% in stock and 40% in the bond. Compute the portfolio return.

Exercise 2 (5 points)

Consider a two assets portfolio. The portfolio has two assets A and B and the following detail:

Investment Returns

A $25,000 10%

B $75,000 8%

Compute the return of the portfolio.