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Suppose you have $225,000 in cash, and you decide to borrow another $33,750 at a 4% interest rate to invest in the stock market. You
Suppose you have $225,000 in cash, and you decide to borrow another $33,750 at a 4% interest rate to invest in the stock market. You invest the entire $258,750 in a portfolio J with a 12% expected return and a 30% volatility. a. What is the expected return and volatility (standard deviation) of your investment? b. What is your realized return if J goes up 29% over the year? c. What return do you realize if J falls by 34% over the year? Suppose you have $225,000 in cash, and you decide to borrow another $33,750 at a 4% interest rate to invest in the stock market. You invest the entire $258,750 in a portfolio J with a 12% expected return and a 30% volatility. a. What is the expected return and volatility (standard deviation) of your investment? b. What is your realized return if J goes up 29% over the year? c. What return do you realize if J falls by 34% over the year
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