Min Has $5,000 to Invest

question 115

Multiple Choice

Min has $5,000 to invest.The expected return on the market portfolio is 11% with a standard deviation of 15%.What are the expected return and standard deviation for the portfolio if she borrowed $2,000 at the risk-free rate of 4% to invest in the market portfolio?

• A)Expected return = 19.40%; standard deviation = 15.40%
• B)Expected return = 15.40%; standard deviation = 19.40%
• C)Expected return = 13.80%; standard deviation = 21.00%
• D)Expected return = 21.00%; standard deviation = 13.80%

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