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You decide to buy 10,000 shares of the Boston-based company, Stahwahz, Inc., using the full amount of margin available to you (i.e., 50%). The stock has a beta of 2.25 and the market's risk premium is 6%. Assuming the risk free rate is 2% and your borrowing cost is 3.5%, what is the expected annual return of this levered investment (i.e., your capital)?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92414988

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