Question

Suppose you have $10,000 in cash and you decide to borrow another $10,000 at a 6% interest rate to invest in the stock market. You invest the entire $20,000 in an exchange traded fund (ETF) with a 12% expected return and a 20% volatility. 7) The expected return on your of your investment is closest to: Expected return of your investment = (20000*1.12 – 10000*1.06) / 10000 – 1 = 18% 8) The volatility of your of your investment is closest to: 9) Assume that the EFT you invested in returns -10%, then the realized return on your investment is closest to:

Answer 1

Answer:

1. 18%

2. 0.40

3.-26%

Explanation:

Please see attachment .