1. Tethys has $200K to invest, is aware that his local bank provides a GIC yielding 2% EAR and also sells a diversified ETF that tracks the broad market which is expected to earn 8% EAR in the coming year. If Tethys borrows from the bank at 4.5% and the current government issued notes are yielding 0.75%, what is his expected rate of return if he hopes to invest $300K in the market ETF?

1. 3.5%
2. 5.73%
3. 8%
4. 9.75%
5. 11.63%