Question: Suppose that the borrowing rate that your client faces is 5%. Assume that the equity market index has an expected return of 11% and standard

Suppose that the borrowing rate that your client faces is 5%. Assume that the equity market index has an expected return of 11% and standard deviation of 24%. Also assume that the risk-free rate is r_f = 2%. Your fund manages a risky portfolio, with the following details: E(r_p) = 12%, _p = 15%.

What is the largest percentage fee that a client who currently is lending (y < 1) will be willing to pay to invest in your fund? What about a client who is borrowing (y > 1)?

Note: Negative values should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal place.

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