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Suppose you have $150,000 in cash, and you decide to borrow another $16,500 at a 7% interest rate to invest in the stock market. You
Suppose you have $150,000 in cash, and you decide to borrow another $16,500 at a 7% interest rate to invest in the stock market. You invest the entire $166,500 in a portfolio J with a 21% expected return and a 21% volatility. a. What is the expected return and volatility (standard deviation) of your investment? b. What is your realized return if J goes up 12% over the year? c. What return do you realize if J falls by 21% over the year
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