b. Assume now that you are able to borrow and lend at a risk-free rate of 6

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b. Assume now that you are able to borrow and lend at a risk-free rate of 6 percent. Which portfolio is preferred? Would you borrow or lend at the risk-free rate to achieve a desired position? What is the effect of borrowing and lending on the expected retum and on the standard deviation?

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