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Consider a figure with the standard investment opportunity set, efficient frontier and a Capital market line with a specific risk-free interest rate rf. By drawing
Consider a figure with the standard investment opportunity set, efficient frontier and a Capital market line with a specific risk-free interest rate rf. By drawing indifference curves over this figure, describe the preferences of the agents who are better-off or worse off, when the risk-free interest rate moves higher. Now suppose that only the borrowing rate moves higher and repeat your analysis, drawing another figure. Consider a figure with the standard investment opportunity set, efficient frontier and a Capital market line with a specific risk-free interest rate rf. By drawing indifference curves over this figure, describe the preferences of the agents who are better-off or worse off, when the risk-free interest rate moves higher. Now suppose that only the borrowing rate moves higher and repeat your analysis, drawing another figure
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