QUESTION 2 Karl's utility function is U = E(1)-0.50;. He has $50,000 to invest and has identified a risky portfolio with a standard deviation of 14% and a Sharpe ratio of 0.35. He will combine an investment in this portfolio with borrowing or lending at the risk-free rate. Karl's optimal choice will require him to: (A) Borrow $25,000 (B) Borrow $75,000 (C) Borrow $250,000 (D) Borrow $500,000