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I invest $1000 of my own money in a portfolio. This involves buying $5000 of IBM, shorting $3000 in YHOO, and borrowing the rest at
I invest $1000 of my own money in a portfolio. This involves buying $5000 of IBM, shorting $3000 in YHOO, and borrowing the rest at the risk free rate. Over the next month, IBM and YHOO are both expected to make 10%. The risk free rate is 5% per month effective. What is the expected return on my portfolio over the next month? (A) 15% (B) 7% (C) 25% (D) 75% I invest $1000 of my own money in a portfolio. This involves buying $5000 of IBM, shorting $3000 in YHOO, and borrowing the rest at the risk free rate. Over the next month, IBM and YHOO are both expected to make 10%. The risk free rate is 5% per month effective. What is the expected return on my portfolio over the next month? (A) 15% (B) 7% (C) 25% (D) 75%
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