Assume that an investor has a two-asset portfolio worth $1 million. Asset X has an expected return of 5%, and Asset Y has an expected return of 10%. The portfolio has $800,000 in Asset X and $200,000 in Asset Y. Based on these figures, compute the expected return of the portfolio.

The expected return of a portfolio is the weighted average of the expected returns of its individual assets, where the weights correspond to the proportion of each asset in the portfolio. Given: - Asset X has an expected return of 5%. - Asset Y has an expected return of 10%. - The portfolio has $800,000 in Asset X and $200,000 in Asset Y. The formula for the expected return of the portfolio is: Expected Return of Portfolio = (Weight of Asset X * Expected Return of Asset X) + (Weight of Asset Y * Expected Return of Asset Y) Weight of Asset X = Value of Asset X / Total Portfolio Value Weight of Asset Y = Value of Asset Y / Total Portfolio Value Total Portfolio Value = $800,000 + $200,000 = $1,000,000 Calculations: Weight of Asset X = $800,000 / $1,000,000 = 0.8 Weight of Asset Y = $200,000 / $1,000,000 = 0.2 Expected Return of Portfolio = (0.8 * 0.05) + (0.2 * 0.10) Expected Return of Portfolio = 0.04 + 0.02 Expected Return of Portfolio = 0.06 Expected Return of Portfolio = 6% Therefore, the expected return of the portfolio is 6%.