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In Business / High School | 2025-07-08

C. InvestSmart Financial Services manages five investment portfolios. The firm wants to evaluate the overall return on investment (ROI) across these five portfolios. They have gathered the following data for the past quarter: | Portfolio | Total Investment ($) | Return ($) | |---|---|---| | Portfolio 1 | 1,000,000 | 120,000 | | Portfolio 2 | 500,000 | 60,000 | | Portfolio 3 | 750,000 | 75,000 | | Portfolio 4 | 2,000,000 | 240,000 | | Portfolio 5 | 1,500,000 | 150,000 | Calculate the average rate of return on investment (ROI) across all five portfolios?

Asked by penaabel6365

Answer (1)

To calculate the average rate of return on investment (ROI) across all five portfolios, we need to follow these steps:

Understand the formula for ROI : The formula for ROI is given by: ROI = ( Total Investment Return ​ ) × 100%

Calculate the ROI for each portfolio :

Portfolio 1 : ROI = ( 1 , 000 , 000 120 , 000 ​ ) × 100% = 12%
Portfolio 2 : ROI = ( 500 , 000 60 , 000 ​ ) × 100% = 12%
Portfolio 3 : ROI = ( 750 , 000 75 , 000 ​ ) × 100% = 10%
Portfolio 4 : ROI = ( 2 , 000 , 000 240 , 000 ​ ) × 100% = 12%
Portfolio 5 : ROI = ( 1 , 500 , 000 150 , 000 ​ ) × 100% = 10%


Calculate the average ROI across all portfolios :
To find the average ROI, add up all the individual ROIs and divide by the number of portfolios:
Average ROI = 5 ( 12% + 12% + 10% + 12% + 10% ) ​ = 5 56% ​ = 11.2%


Therefore, the average rate of return on investment across the five portfolios is 11.2% .
This calculation helps InvestSmart Financial Services to assess the overall performance of their investment portfolios, enabling them to make informed decisions about their investment strategies.

Answered by OliviaMariThompson | 2025-07-21

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