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Potvin Potvin
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7 years ago
You want to buy $20,000 worth of shares in Tootsie Roll Industries Inc. on margin, but you only have $10,000 of your own money to invest. The remaining $10,000 is borrowed by issuing T-Bills; assume the cost of borrowing is the risk-free rate. The weight of Tootsie Roll Industries in your portfolio is 2.0. The weight of T-Bills in your portfolio is -1.0. Assume that the expected return on Tootsie Roll is 12% and the expected return on the risk free asset (T-Bills) is 5%. What is the return on your portfolio?
A) 17%
B) 18%
C) 19%
D) 20%
E) 21%
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Corporate Finance Online

Corporate Finance Online


Edition: 1st
Authors:
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BlimpBlimp
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7 years ago
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Pol. Sci. Major
Minoring in Business
Columbia University Sophomore

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Potvin Author
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#2
7 years ago
You're incredible, ty
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