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Stock As stock is expected to earn a 10% return with a 20% volatility over a one-year period. You have decided to purchase today $18,000
Stock As stock is expected to earn a 10% return with a 20% volatility over a one-year period. You have decided to purchase today $18,000 worth of this stock on margin, by borrowing $12,000 at 5% risk-free interest rate and using $6,000 of your own money to make the purchase. The above information implies that the range of realized returns on your investment, with a rise or fall of the stocks return over the year: a) Will not be affected b) Will double c) Will triple d) Will quadruple e) None of the above
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