Question

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:

Answer 1

0.40

Step-by-step explanation:

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