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A portfolio composed of +200% of the efficient portfolio and of -100% of the risk-free asset means (with one good answer and explanation): Borrowing 200%

A portfolio composed of +200% of the efficient portfolio and of -100% of the risk-free asset means (with one good answer and explanation):

  1. Borrowing 200% of the capital by issuing the efficient portfolio and investing 100% of the capital in the risk-free asset.

  2. Borrowing 100% of the capital by issuing the risk-free asset and investing 200% of the capital in the efficient portfolio.

  3. Investing 100% of the capital in the risk-free asset and investing 100% of the capital in the efficient portfolio.

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