Suppose You Have $10,000 in Cash and You Decide to Borrow

question 16

Multiple Choice

Suppose you have $10,000 in cash and you decide to borrow another $10,000 at a(n) 6% interest rate to invest in the stock market. You invest the entire $20,000 in an exchange-traded fund (ETF) with a 10% expected return and a 20% volatility. Assume that the ETF you invested in returns -10%. Then the realized return on your investment is closest to ________.

• A) -18%
• B) -10%
• C) -23%
• D) -26%

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Definitions:

Exit Interviews

A process through which an organization gathers feedback from departing employees to improve work conditions and retain talent.

Interpretable Messages

Messages that can be understood and made sense of by the intended receiver.

Extended Gaze

A prolonged look or stare, often used in psychological research to study attachment, social cues, and interpersonal attraction.

Source Amnesia

Source amnesia is the inability to remember where, when, or how previously learned information has been acquired, while retaining the factual knowledge.