Suppose you can invest in either botha risky asset with an expected return of 10%, and a risk-free asset with an expected return of 2 %. Suppose you want to create a portfolio with an expected return higher than 10 %. How can you achieve your goal?

Borrow money at the risk-free rate, your initial fundand the borrowed money in the risky portfolio.

It is not possible to earn more than the riskier asset . It depends on your level of risk aversion

Invest 100% in the risky asset , and hope the return will be higher

Invest 50 % in the risky asset and 50 % in the risk free asset