Question: Suppose that the borrowing rate that your client faces is 1 0 % . Assume that the equity market index has an expected return of

Suppose that the borrowing rate that your client faces is 10%. Assume that the equity market index has an expected return of 16% and standard deviation of 22%. Also assume that the risk-free rate is rf =3%. Your fund manages a risky portfolio, with the following details: E(rp)=12%,\sigma p =18%.

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