Assume you can borrow and save at 5% and invest in the stock market. The stock market has an expected return of 15% and a standard deviation of 20%. You have $10,000to invest. Assume you can borrow as much as you want.(assume the federal reserve requirement that you can borrow only half the money you invest has been dropped).
(A) assume you borrow $20,000 and invest that along with your $10,000 in the market. What is your expected return and the standard deviation of your return?
(B) how much must you borrow and invest in the stock market in order to get an expected return of 45%?
(C) make an expected return-standard deviation graph and mark the point corresponding to (i) the risk-free investment,(ii) the stock market,(iii) the answer to part(a), and (iv) the answer to part (b)