Ignoring Borrowing Costs, an Investor Who Borrows Three-Quarters of the Funds

question 6

Multiple Choice

Ignoring borrowing costs, an investor who borrows three-quarters of the funds to invest in an asset that rises from $100 to $175 makes an effective rate of return of

• A) 75%.
• B) 400%.
• C) 700%.
• D) none of the above.

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Definitions:

Primary Component

The most essential or chief element that plays a central role in the system or structure it is part of.