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An investor has $50,000 to invest. She decides to put $75,000 into the market by...

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Finance

An investor has $50,000 to invest. She decides to put $75,000 into the market by borrowing $25,000. You are given: The effective risk-free interest rate is 5%. The market expected return is 12%. The market volatility is 18%. Calculate the expected return and the volatility of the investment.

  1. Expected Return = 15.5%; Volatility = 7.3%

  2. Expected Return = 15.5%; Volatility = 27%

  3. Expected Return = 26%; Volatility = 7.3%

  4. Expected Return = 26%; Volatility = 54%

  5. Not enough information is given

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