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Suppose a certain investor has $ 2 0 , 0 0 0 to invest, but he raises an additional $ 5 , 0 0 0

Suppose a certain investor has $

20, 000

to invest, but he raises an additional $

5, 000

by borrowing. The investor then puts all $

25, 000

in the market portfolio. Knowing that the market risk premium is

6 %

and the risk

-

free rate is

3 % .

The expected return on this portfolio is equal to

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