John has an investment budget of 20,000. In addition, he has borrowed 10,000 at a fixed...
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John has an investment budget of £20,000. In addition, he has borrowed £10,000 at a fixed interest rate of 5%. He decides to invest all available funds in a portfolio of equities which has an expected rate of return of 12% and standard deviation of 20%. What is the standard deviation of the return on John's overall investment portfolio? (10) John has an investment budget of £20,000. In addition, he has borrowed £10,000 at a fixed interest rate of 5%. He decides to invest all available funds in a portfolio of equities which has an expected rate of return of 12% and standard deviation of 20%. What is the standard deviation of the return on John's overall investment portfolio? (10)
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Denote the equity portfolio as E and the borrowed funds as B Weight of ... View the full answer
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