Use the Information for the Question(s)below

question 47

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.
-Assume that the EFT you invested in returns -10%,then the realized return on your investment is closest to:

• A)-20%.
• B)-10%.
• C)-24%.
• D)-26%.

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Definitions:

Cash Disbursements

Transactions involving the payment of cash by a business, often documented in a journal that records money going out of the company.

Cash Balance

The amount of money or cash equivalents that a company or individual possesses at any given time.

Cash Receipts

The collection of money, including coins, notes, negotiable instruments like checks, and electronic funds transferred into a business.

Not-for-Profit Organizations

Entities that operate for purposes other than generating profit, focusing on social, educational, charitable, or other activities serving the public interest.