Mrs. Abecrombus has $2,000 to invest. There are only two possible investments: a levered firm with a D/E ratio of 1 and a share price of $20, and a risk-free asset with a return of 10%. If Mrs. Abecrombus prefers a D/E ratio of 2, how can she use homemade leverage to achieve her goal?

Select one:

a.borrow $2,000 at the risk-free rate and buy 200 shares

b.lend $2,000 at the risk-free rate and sell 100 shares

c.lend $1,000 at the risk-free rate and sell 50 shares

d.borrow $1,500 at the risk-free rate and buy 175 shares

e.borrow $1,000 at the risk-free rate and buy 150 shares