Question: Can someone do the question below with working I can seem to figure it out, thanks. Suppose that the risk-free rate is 6 percent and
Can someone do the question below with working I can seem to figure it out, thanks.
Suppose that the risk-free rate is 6 percent and the expected return on the market portfolio is 15 percent. An investor with $1.5 million to invest wants to achieve a 25 percent return on a portfolio combining the risk-free asset and the market portfolio. Calculate how much this investor would need to borrow at the risk-free rate in order to establish this target expected return. Provide your final answers up to two decimal points.
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
