Suppose you have $325,000 in cash, and you decide to borrow another $55,250 at a 2% interest rate to invest in the stock market. You invest the entire $380,250 in portfolio J with a 15% expected return and a 27% volatility.
a. What is the expected return and volatility? (standard deviation) of your? investment?
b. What is your realized return if J goes up 38% over the? year?
c. What return do you realize if J falls by 18% over the? year?