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Suppose that the risk-free rate is 5% and the expected return on the market portfolio of risky assets is 13%.An investor with $1 million to
Suppose that the risk-free rate is 5% and the expected return on the market portfolio of risky assets is 13%.An investor with $1 million to invest wants to achieve a 17% rate of return on a portfolio combining a risk-free asset and the market portfolio of risky assets.Calculate how much this investor would need to borrow at the risk-free rate in order to establish this target expected return.
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