For a simple portfolio of four mutual funds provided by Jefferson, the total rate of return or ROR can be calculated as follows:
Let A = Money Market
LET B= Government Bond
Let C=Prefered Stock
Let D= Common Stock
Let X= ROR
X=Allocation *ROR of A+B+C+D
X=(6400*.035)+(1500*.012)+(2300*-.021)+(600*.098)
X= 224+18-48.3+58.8
X=300.8
While mean ROR is computed as
Mean ROR=total ROR/total allocation
Mean ROR=300.8/10800
=.027 or 2.7%
