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An investor believes that next year’s returns on an S&P500 index mutual fund will come from a normal probability distribution with expected return of 12% and standard deviation of 15%. The risk-free rate is 2%. What will be the expected return and standard deviation of a combination if the investor borrows $20,000, combines it with his $100,000 and invests the entire $120,000 in the index mutual fund. What will be the probability of loss on this portfolio?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M93060177

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