Question: Suppose that the borrowing rate that your client faces is 12%. Assume that the S&P 500 index has an expected return of 17% and standard

Suppose that the borrowing rate that your client faces is 12%. Assume that the S&P 500 index has an expected return of 17% and standard deviation of 21%. Also assume that the risk-free rate is r_f = 6%. Your fund manages a risky portfolio, with the following details: E(r_p) = 16%, _p = 26%.

What is the largest percentage fee that a client who currently is lending (y y > 1)?

Suppose that the borrowing rate that your client faces is 12%. Assume

y 1

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