Suppose Balin has $100 to invest in an opportunity that returns,for every $100 invested,$120 if it goes well but only $80 if it goes poorly.If leverage allows Balin to borrow $90 for every $10 he invests,what are his rates of profit and loss,respectively,if he borrows the full amount to invest in the opportunity?
A) 20 percent profit;20 percent loss.
B) 33.3 percent profit;50 percent loss.
C) 200 percent profit;100 percent loss.
D) 1,100 percent profit;100 percent loss.

Question

Quizplus · Accepted Answer

Balin invests $10 of his own money and borrows $90, totaling $100 to invest in the opportunity. 
If it goes well, he gets $120, meaning he gained $20 profit ($120 - $100 invested) or a rate of profit of 200% ($20 profit on $10 original investment). 
However, if it goes poorly, he only gets $80 which means he lost $20 ($100 invested - $80) or a rate of loss of 100% ($20 loss on $10 original investment).

Suppose Balin Has $100 to Invest in an Opportunity That