Suppose You Borrow at the Risk-Free Rate an Amount Equal

question 71

Multiple Choice

Suppose you borrow at the risk-free rate an amount equal to your initial wealth and invest in a portfolio with an expected return of 16 percent and a standard deviation of returns of 20 percent. The risk-free asset has an interest rate of 4 percent. Calculate the expected return on the resulting portfolio.

• A)20 percent
• B)32 percent
• C)28 percent
• D)12 percent

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Definitions:

Geologic Timescale

A chronological dating system that relates geological strata to time, used by geologists to describe the timing and relationships between events that have occurred throughout Earth's history.

Fossil Data

Information derived from fossils that helps in understanding the past, including the history of life and ancient environments.

Time Period

A specific duration or interval of time, often characterized by certain events, conditions, or phenomena.

Sedimentary Layer

A layer of sedimentary rock which has been deposited over time, often distinguishable from other layers by its composition and color.