Borrowing or lending The capital asset pricing model (CAPM) suggests the investors first consider the market portfolio and then decide a portfolio that would require borrowing and lending to archive a desired level of risk and return trade off. For an investor who is willing to take more risk, this would mean that they borrow at the risk free rate and invest in the market portfolio and repeat the process every period. Suppose you are a long-term investor (saving for retirement) who is willing to hold a portfolio twice as risky as the market portfolio. How would you implement the suggestion of CAPM? What are the limitations? Explain Borrowing or lending The capital asset pricing model (CAPM) suggests the investors first consider the market portfolio and then decide a portfolio that would require borrowing and lending to archive a desired level of risk and return trade off. For an investor who is willing to take more risk, this would mean that they borrow at the risk free rate and invest in the market portfolio and repeat the process every period. Suppose you are a long-term investor (saving for retirement) who is willing to hold a portfolio twice as risky as the market portfolio. How would you implement the suggestion of CAPM? What are the limitations? Explain