You have purchased $10,000 of Shaan Company stock on margin, with 20% of the $10,000 borrowed at the risk-free interest rate of 4%. The stock has an expected return of 16% and a volatility of 24%. What return do you expect to earn and with what volatility as a result of your purchase on margin?

1. 12%, 18%
2. 18%, 28%
3. 19%, 30%
4. None of the above