medium · CFA Level I quant
An analyst at Oakridge Capital is evaluating a highly leveraged position. The asset has a return of 8.0%, and the position is financed with 40% equity and 60% debt at a borrowing cost of 5.0%. The return on equity (R_e) is closest to:
- 12.5%
- 9.8%
- 20.0%
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