Question

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%. If you wish to earn a 22% return, you should _________.
A. invest $125,000 in the risk-free asset
B. invest $375,000 in the risk-free asset
C. borrow $125,000
D. borrow $375,000

Answer

This answer is hidden. It contains 2 characters.