Question: 2 1 If the Fed increases the risk - free rate to 6 % ( 0 . 5 % per month ) , which of

21

If the Fed increases the risk

-

free rate to

6 % (0.5 %

per month

),

which of the following is true? A The composition of the Sharpe potfolio will not be affected B The risk of the Sharpe portfolio will go up C The risk of the Sharpe portfolio will go up D The reward to risk ration will go down E B and D are correct

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