Aplia Chapter 6 - Risk and Return 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 Artemis Inc Percentage of Portfolio 20% Expected Return 6.00% Babish & Co. 14.00% 30% 3596 Standard Deviation 38.00% 42.00% 45.00% 47.00% Cornell Industries 13.00% 3.00% Danforth Motors 15% What is the expected return on Andre's stock portfolio? @ 14.04% 15.60% 10.40% 17.80%