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An investor has AU$300,000 to invest. She borrowed an additional AU$200,000 at 5% risk-free rate and invest the entire amount in a risky portfolio. Return
An investor has AU$300,000 to invest. She borrowed an additional AU$200,000 at 5% risk-free rate and invest the entire amount in a risky portfolio. Return and standard deviation of the risky portfolio are 10% and 18% respectively. Calculate reward-to-volatility ratio in the borrowing region. (Please note that risk-free rate in the lending region is 4%)
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