John has an investment budget of £20,000. In addition, he has borrowed £10,000 at afixed interest rate of 5%. He decides to invest all available funds in a portfolio of equitieswhich has an expected rate of return of 12% and standard deviation of 20%. What is thestandard deviation of the return on John’s overall investment portfolio?

John has an investment budget of £20,000. In addition, he has borrowed £10,000 at afixed interest rate of 5%. He decides to invest all available funds in a portfolio of equitieswhich has an expected rate of return of 12% and standard deviation of 20%. What is thestandard deviation of the return on John’s overall investment portfolio?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 4P

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