You Buy an Asset for $2,500

question 60

Essay

You buy an asset for $2,500. The asset will return $3,300 half of the time and $2,700, the other half. The expected return is 20% (a gain of $500) and the standard deviation is 12% ($300). How would using $1,250 of borrowed funds change the expected return and standard deviation specifically?

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Definitions:

Integrity

The quality of being honest and having strong moral principles, considered foundational to trustworthiness and ethical behavior in personal and professional contexts.

Statutes

Laws established by a legislative body to regulate, authorize, sanction, grant, declare, or restrict.

Ethical Decisions

Choices made based on moral principles and values, considering what is right and fair for all involved parties.

Entrepreneurs

Individuals who initiate, manage, and accept the risks of a business venture in order to make a profit.