The expected return for X is RX=12% and X=5%. The risk-free rate is RF=2%. An investor has formed a portfolio with 200% invested in X.

1. The expected return is

a. 24%

b. 22%

c. 20%

d. 4%

e. 0%

2. The risk of this portfolio is

a. Twice that of X

b. The same as X

c. Zero because the risk-free asset is incorporated

d. Greater than X because of leverage

e. Both a and d are correct