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Sam has decided to do a margin trade by borrowing $4,000 and putting up $7,200 himself. The portfolio he is investing in earns expected returns
Sam has decided to do a margin trade by borrowing $4,000 and putting up $7,200 himself. The portfolio he is investing in earns expected returns of E(r)=14% and exhibits standard deviation of 49%. What will be the expected return on his investment, if the risk free rate to invest in is 2.7% and the rate at which money can be borrowed is 7.2%?
Provide your answer in percent, rounded to two decimals
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