A margin user has a situation where the riskfree rate is 6% and the risky portfolio has an expected return of 12% with a standard deviation of 15%. If the proportion in risky portfolio is 1.8, the expected return is

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Quizplus · Accepted Answer

The expected return for a margin user can be calculated using the formula: Expected Return = Risk-free rate + Proportion in risky portfolio * (Expected return of risky portfolio - Risk-free rate). Substituting the given values: 6% + 1.8 * (12% - 6%) = 21.6%.

A Margin User Has a Situation Where the Riskfree Rate