3). You have $200,000 available to invest. The risk-free rate of return is 6% (you can...

Transcribed Image Text:

3). You have $200,000 available to invest. The risk-free rate of return is 6% (you can borrow and lend at that rate of return). The return on the risky portfolio is 17%. If you wish to earn a 21% return, you should (a) invest $72,000 in the risk-free asset (b) invest $70,000 in the risk-free asset (c) borrow $70,000 (d) borrow $72,000 (e) no solution--you cannot achieve this high return with these two assets EXPLAIN YOUR ANSWER! 3). You have $200,000 available to invest. The risk-free rate of return is 6% (you can borrow and lend at that rate of return). The return on the risky portfolio is 17%. If you wish to earn a 21% return, you should (a) invest $72,000 in the risk-free asset (b) invest $70,000 in the risk-free asset (c) borrow $70,000 (d) borrow $72,000 (e) no solution--you cannot achieve this high return with these two assets EXPLAIN YOUR ANSWER!