A broker wants to sell a customer an investment costing $100 with an expected payoff in one year of $109.2. The customer indicates that a 9.2 percent return is not very attractive. The broker responds by suggesting the customer borrow $90 for one year at 7.2 percent interest to help pay for the investment.a. What is the customer's expected return if she borrows the money?Note: Round your answer to 1 decimal place.
A broker wants to sell a customer an investment costing $100 with an expected payoff in one year of $109.2. The customer indicates that a 9.2 percent return is not very attractive. The broker responds by suggesting the customer borrow $90 for one year at 7.2 percent interest to help pay for the investment.a. What is the customer's expected return if she borrows the money?Note: Round your answer to 1 decimal place.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:A broker wants to sell a customer an investment costing $100 with an expected payoff in one year of $109.2. The
customer indicates that a 9.2 percent return is not very attractive. The broker responds by suggesting the
customer borrow $90 for one year at 7.2 percent interest to help pay for the investment.a. What is the customer's
expected return if she borrows the money?Note: Round your answer to 1 decimal place.
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