Use the Information for the Question(s)below

question 19

Multiple Choice

Use the information for the question(s) below.
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.
-The volatility of your investment is closest to:

• A)40%.
• B)20%.
• C)30%.
• D)24%.

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Definitions:

Involuntary Responses

Physical or emotional reactions that occur without conscious choice, often as reflexes or automatic responses.

Classical Conditioning

An instructional process where two stimuli are frequently combined, leading to a response that initially comes from the second stimulus but later comes from the first stimulus alone.

Neutral Stimuli

Stimuli that do not elicit any particular response before conditioning in a learning process.

Conditioned Responses

The acquired reaction to a once neutral stimulus that has been linked with a natural, unconditioned stimulus.