An Investor Wishes to Construct a Portfolio by Borrowing 35

question 98

Multiple Choice

An investor wishes to construct a portfolio by borrowing 35 percent of his original wealth and investing all the money in a stock index. The return on the risk-free asset is 4.0 percent, and the expected return on the stock index is 15 percent. Calculate the expected return on the portfolio.

• A) 18.25 percent
• B) 18.85 percent
• C) 9.50 percent
• D) 15.00 percent
• E) 11.15 percent

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Definitions:

Interleukin-1 Receptor

A type of protein that binds interleukin-1, playing a crucial role in mediating inflammatory responses.

IgA

An antibody essential to the immune function of mucosal surfaces.

Saliva and Tears

Bodily fluids produced by salivary and lacrimal glands, respectively, playing roles in digestion, oral health, and eye lubrication.

IgD

A class of antibodies that plays a role in the activation of immune cells and is found in small amounts in the blood.