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1.Dropping the risk-free asset causes the investors portfolio to move down the hill of happiness (i.e., they get less utility from the portfolio with no
1.Dropping the risk-free asset causes the investors portfolio to move down the hill of happiness (i.e., they get less utility from the portfolio with no risk-free asset). Can you explain this result in the context of constrained optimization?
2.What are the portfolio weights on the risk-free asset and the tangency portfolio in portfolio ? Explain the portfolio strategy in terms of borrowing or lending.
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