Which portfolio has a higher expected return?

To determine which portfolio has a higher expected return, we rely on the general principles of portfolio management. Expected return is calculated based on the weighted averages of the expected returns of the individual assets within the portfolios.

Portfolio #1 being identified as having a higher expected return suggests that it contains assets with higher yield potential or risk-adjusted performance compared to Portfolio #2. This could be due to various factors such as the types of securities held, market conditions, or the specific weights of high-return assets within the portfolio.

It's essential in portfolio management to look at how different asset allocations impact the overall expected return. If Portfolio #1 is composed of aggressive growth stocks or high-yield bonds while Portfolio #2 contains more conservative investments, such as government bonds or blue-chip stocks, the expected return of Portfolio #1 would naturally be higher.

In terms of the context provided by the other options, if both portfolios had the same expected return, it would typically indicate that they are similar in terms of risk and return profile. The option stating that neither portfolio has an expected return is also not valid, as at least one of the portfolios is expected to yield a return based on standard investment theories.

Overall, identifying Portfolio #1 as having the higher expected return indicates