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Suppose you have $300,000 in cash, and you decide to borrow another $48,000 at a 5% interest rate to invest in the stock market. You
Suppose you have $300,000 in cash, and you decide to borrow another $48,000 at a 5% interest rate to invest in the stock market. You invest the entire $348,000 in a portfolio J with a 13% expected return and a 28% volatility. a. What is the expected return and volatility (standard deviation) of your investment? The expected return of your investment is %. (Round to two decimal places.) The volatility (standard deviation) of your investment is %. (Round to two decimal places.) b. What is your realized return if J goes up 40% over the year? Your realized return if J goes up 40% over the year is %. (Round to two decimal places.) c. What return do you realize if J falls by 15% over the year? The return you realize if J falls by 15% over the year is %. (Round to two decimal places.)
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