Consider two portfolios. One portfolio consists of a $10,000
investment in AAPL, and the other also consists of a $10,000
investment in AAPL, but with 50% leverage ($5,000 of the investor's
capital, $5,000 borrowed). Now consider two separate moves in the
value of AAPL; a 10% upside return and a 10% downside return.
Explain the effect of leverage on the volatility and return by
comparing the performance of each portfolio.