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An investor is bullish about metal prices and buys on margin shares of BHP Billiton Ltd. (BHP) currently trading at $78 per share. The initial
An investor is bullish about metal prices and buys on margin shares of BHP Billiton Ltd. (BHP) currently trading at $78 per share. The initial margin requirement is 60%, and she has $4,450 to invest as initial margin. The expected return of the market is 10% and the volatility (std. deviation) of the market is 17%. The risk-free rate is 1% and BHP has a beta of 1.48. According to CAPM, what should be the expected return of the investors portfolio including the margin purchase? Enter your answer as a decimal (not as a percent).
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