Describe seperately how adding option to portfolio

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1. Describe SEPERATELY how adding an option to a portfolio may increase the the existing risk of the portfolio or may decrease the existing risk of the portfolio.

2. If Pepperdine, Inc.'s return on equity is 14 percent and the management plans to retain 55 percent of earnings for investment purposes, what will be the firm's growth rate? (Round to two decimal places.)


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