You have $248,641 to invest in a stock portfolio (this amount is your original wealth). Your choices are Stock H, with an expected return of 14.17 percent, and Stock L, with an expected return of 11.28 percent. Legal constraints require you to invest at least $42,800 in stock L. If your goal is to create a portfolio with an expected return of 21.8 percent on your original wealth, what is the minimum amount you must borrow (and subsequently repay) at the risk free rate of 3.64 percent to achieve your goal? Answer in $ to two decimals.
You have $248,641 to invest in a stock portfolio (this amount is your original wealth). Your choices are Stock H, with an expected return of 14.17 percent, and Stock L, with an expected return of 11.28 percent. Legal constraints require you to invest at least $42,800 in stock L. If your goal is to create a portfolio with an expected return of 21.8 percent on your original wealth, what is the minimum amount you must borrow (and subsequently repay) at the risk free rate of 3.64 percent to achieve your goal? Answer in $ to two decimals.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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You have $248,641 to invest in a stock portfolio (this amount is your original wealth). Your choices are Stock H, with an expected return of 14.17 percent, and Stock L, with an expected return of 11.28 percent. Legal constraints require you to invest at least $42,800 in stock L. If your goal is to create a portfolio with an expected return of 21.8 percent on your original wealth, what is the minimum amount you must borrow (and subsequently repay) at the risk free rate of 3.64 percent to achieve your goal? Answer in $ to two decimals.
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