1. Write down the formulae for the return and expected return from time t=0 and t=T on (a) a leveraged purchase, Klev, let w be the percent of the stock price purchased with own money, and rl the annual compounding interest rate you are able to borrow money. (b) a short position in stock, Kss, let c be the percent of the stock price reserved for collateral and rc the annual compounding interest rate that the collateral attracts interest and r be the risk free interst rate you can invest in for non-collateral investments. 2. Using your formulae from question 1. graph Klev vs S(T) if S(0)=100,T=1 and rl=0.04 for w=1,w=0.75,w=0.5,w=0.25