You have 500000 available to invest the risk-free rate as


You have $500,000 available to invest. The risk-free rate, as well as your borrowing rate, is 8%. The return on the risky portfolio is 16%. The standard deviation on the risky portfolio is 50%.

a. If you wish to earn a 22% return, how much money should you borrow?

b. If the standard deviation on the complete portfolio is 25%, what is the expected return on the complete portfolio?

 

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Finance Basics: You have 500000 available to invest the risk-free rate as
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