An Investor Wishes to Construct a Portfolio by Borrowing 35

question 87

Multiple Choice

An investor wishes to construct a portfolio by borrowing 35% of his original wealth and investing all the money in a stock index.The return on the risk-free asset is 4.0% and the expected return on the stock index is 15%.Calculate the expected return on the portfolio.

• A) 18.25%
• B) 18.85%
• C) 9.50%
• D) 15.00%
• E) 11.15%

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Definitions:

Essentialism

A belief that things have a set of characteristics that make them what they are, and that the task of science and philosophy is their discovery and description.

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