# Calculating a Portfolio's Expected Return

The predicted return of an investment portfolio can be determined with this handy portfolio expected return calculator. Simply input the required information into the fields available, and the calculator will determine the portfolio's predicted return.

The weighted average of each component's expected return is used to calculate the expected return for an investment portfolio as a whole. The weight of each component is an indicator of how much overall value it represents. Investors can also evaluate how well-diversified their investment portfolio is by looking at the weighted average of the portfolio's assets.

Suppose the portfolio consists of three different investments: A, B, and C. A receives $4,000, B receives $10,000, and C receives $6,000 in investments. Suppose that A, B, and C's projected returns have been identified as 30%, 20%, and 40%, respectively. The projected return of the portfolio can be computed as follows using the respective investments in each asset component:

Expected Return of Portfolio = w_{1}E_{1} + w_{2}E_{2} + w_{3}E_{3} + ... + w_{n}E_{n}

where:

w_{n} = weight of asset n in the portfolio,

E_{n} = expected return of asset n,

n = number of assets in the portfolio.

Expected Return of Portfolio = 0.2(30%) + 0.5(20%) + 0.3(40%)

= 6% + 10% + 12%

= 28%

As such, the portfolio has an expected return of 28%.

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