An Investor Wishes to Construct a Portfolio by Borrowing 35

Multiple Choice

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

A) 18.25%
B) 18.85%
C) 9.50%
D) 15.00%
E) 11.15%