Assume there are different risk free rates for borrowing and lending, and R b 0 R I 0 Sketch the capital market curve graphically and explain what happens to the tangential portfolio ...

Ans Investing in a riskfree asset is frequently referred to as riskfree lending since investment in such assets tantamount to giving loan directly to ...

Assume there are different risk-free rates for borrowing and lending, and R b 0 > R I

Question:

Assume there are different risk-free rates for borrowing and lending, and R^b₀ > R^I₀. Sketch the capital market curve graphically and explain what happens to the tangential portfolio.

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