Mr. Fox approaches his broker to borrow money against securities held in his portfolio. Even though Mr. Fax'loan will be secured by the securities in his portfolio, the broker's rate of 5 percent and the market portfolio return of 15 percent with a standard deviation of 20 percent.

a. What is(are) the equation(s) for the CML now?

b. Estimate Mr. Fox'expected return and risk if he decides to borrow 25 percent of his initial investment and invest all money in the market.