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11 December, 13:16

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 investment is closest to:

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  1. 11 December, 15:08
    0
    0.40

    Explanation:

    (2) SD (Rxp) = βSD (Rp) = 2 (0.20) = 0.40
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