Discussion Post: Impact of Risk-Free Rates & Market Premiums
Consider all that we have learned thus far regarding the impact of diversification, risk-free securities, and market premiums. With that in mind, describe how adding a risk-free security to modern portfolio theory allows investors to do better than the efficient frontier. Additionally, explain how might the magnitude of the market risk premium impact people's desire to buy stocks?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.