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When borrowing and lending at a risk-free rate are allowed, which capital allocation line (CAL) should the investor choose to combine with the efficient frontier?

When borrowing and lending at a risk-free rate are allowed, which capital allocation line (CAL) should the investor choose to combine with the efficient frontier?

I) The one that connects the individual stock with the highest expected return.

II) The one that will minimize risk.

III) The one with the steepest slope.

IV) The one intersecting the global minimum portfolio.

A.

I and II

B.

I and III

C.

II and IV

D.

III only

E.

I, II, and III

Clear my choice

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