How is the expected return of a portfolio calculated?

The expected return of a portfolio is calculated by taking the weighted average of the expected returns of its individual assets. Each asset's expected return is multiplied by its proportion in the portfolio, and then all these products are summed up. The formula can be expressed as: ( E(R_p) = \sum (w_i \cdot E(R_i)) ), where ( w_i ) is the weight of each asset and ( E(R_i) ) is the expected return of each asset. This approach allows investors to estimate the portfolio's overall performance based on the contributions of its components.