A collection of financial assets and securities is referred to as a portfolio. Most individuals and institutions invest in a portfolio, making portfolio risk analysis an integral part of the field of finance. Just like stand$-$alone assets and securities$,$ portfolios are also exposed to risk. Portfolio risk refers to the possibility that an investment portfolio will not generate the investor$$s expected rate of return.

Analyzing portfolio risk and return involves the understanding of expected returns from a portfolio.

Consider the following case:

Andre is an amateur investor who holds a small portfolio consisting of only four stocks. The stock holdings in his portfolio are shown in the following table:

Stock

Percentage of Portfolio

Expected Return

Standard Deviation

Artemis Inc. $20\%6\mathrm{.}00\%32\mathrm{.}00\%$

Babish & Co$.30\%14\mathrm{.}00\%36\mathrm{.}00\%$

Cornell Industries $35\%12\mathrm{.}00\%39\mathrm{.}00\%$

Danforth Motors $15\%5\mathrm{.}00\%41\mathrm{.}00\%$

What is the expected return on Andre$$s stock portfolio?