B(ii) answer please

(b) Answer the following in order: (0) Assume a risk-free rate of 6% prevails and that there is a risky portfolio P available with an expected return of 14% and a standard deviation of 20%. Graph the Capital Allocation Line (CAL) in this case, showing the slope of the CAL. (ii) Now assume that lending is conducted at the risk-free rate of 6% but that borrowing is conducted at the higher rate of 7%. In this case, graph the Capital Allocation Line (CAL), showing the slope information. Explain how this differs from the CAL in part (1) of this question. (15 marks) (b) Answer the following in order: (0) Assume a risk-free rate of 6% prevails and that there is a risky portfolio P available with an expected return of 14% and a standard deviation of 20%. Graph the Capital Allocation Line (CAL) in this case, showing the slope of the CAL. (ii) Now assume that lending is conducted at the risk-free rate of 6% but that borrowing is conducted at the higher rate of 7%. In this case, graph the Capital Allocation Line (CAL), showing the slope information. Explain how this differs from the CAL in part (1) of this question. (15 marks)