What Return Should Be Expected from Investing in the Market

question 110

Multiple Choice

What return should be expected from investing in the market portfolio that is expected to yield 18% if the investment includes all of the investor's funds plus 30% of additional funds borrowed at the risk-free rate of 6%?

• A) 18.6%
• B) 19.6%
• C) 21.6%
• D) 24.0%

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Definitions:

Common Sense

Practical judgment concerning everyday matters, or a basic ability to perceive, understand, and judge in a manner that is shared by (common to) nearly all people.

Ongoing Process

A continuous operation or progression of steps in a particular task or activity that does not have a definite end.

Complex Objectives

Goals that are multifaceted, challenging to achieve, and often require coordination among various stakeholders.

Values

Fundamental beliefs or principles that guide behavior and judgments about what is important in life.