Question
Suppose you have $325,000 in cash, and you decide to borrow another $68,250 at a 2% interest rate to invest in the stock market. You
Suppose you have $325,000 in cash, and you decide to borrow another $68,250 at a 2% interest rate to invest in the stock market. You invest the entire $393,250 in a portfolio J with a 16% expected return and a 30% 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 20% over the year?
Your realized return if I goes up 20% over the year is (Round to two decimal places.)
c. What return do you realize if J falls by 40% over the year?
The return you realize if I falls by 40% over the year is (Round to two decimal places.)
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