What is considered when calculating the expected return of an investment portfolio?

The expected return of an investment portfolio is determined primarily by the weightage of the assets in the portfolio and their individual expected returns. This concept rests on the principle of combining different investments, each with a specific return potential based on their historical performance, risk profile, and market conditions.

When calculating the expected return, the expected return of each asset is multiplied by its proportion in the overall portfolio. This weighted average gives an accurate reflection of what an investor might expect to earn from their investment mix, factoring in the contribution of each asset according to its weight. This method effectively captures the nature of diversification, where the overall expected return is reliant on the combination of diverse investments rather than on any single asset.

In contrast, the other options focus on different aspects of investment analysis. The age and duration of investments do not directly contribute to the expected return calculation but may influence overall strategy. Individual investor preferences relate to risk tolerance and investment goals, which guide portfolio construction but are not part of the mathematical calculation of expected returns. Lastly, while economic indicators provide context for market conditions, they do not directly dictate the expected return calculation for a given portfolio.

Thus, option C encapsulates the core formula used to determine the expected return effectively, making it the correct choice