Use the Information for the Question(s) Below

question 74

Multiple Choice

Use the information for the question(s) below.
Suppose you have $10,000 in cash and you decide to borrow another $10,000 at a 6% interest rate to invest in the stock market. You invest the entire $20,000 in an exchange traded fund (ETF) with a 12% expected return and a 20% volatility.
-The volatility of your of your investment is closest to:

• A) 40%
• B) 20%
• C) 30%
• D) 24%

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Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds over a period, often expressed as an annual rate.

Note Payable

A written promise to pay a specified sum of money to a designated party by a certain date, often used in business financing.

Journal Entries

Recorded transactions in the financial books of a business that detail the financial activities and their impact on the accounts.

Office Supplies

Items and materials used in offices for routine tasks and operations, such as paper, pens, staplers, and ink cartridges.