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B admire AAA so much that it is the only stock that you want in your portfolio. B have $100,000 of her own money to
B admire AAA so much that it is the only stock that you want in your portfolio. B have $100,000 of her own money to invest and she intend to buy more AAA on margin by borrowing an additional $40,000. Bs broker will lend to her at the risk free rate, 4%, and has guaranteed the lending rate for the duration of your investment. The expected return on the market is 12%. AAA`s beta is 1.25. What return will you expect from your portfolio?
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