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You have access to two risky assets, A and B.E(rA)=2% and E(rB)=8%. If you wish to earn a 12% expected return, you should 1) invest
You have access to two risky assets, A and B.E(rA)=2% and E(rB)=8%. If you wish to earn a 12% expected return, you should 1) invest less than half of your money on A, rest on B. 2) invest more than half of your money on A, rest on B. 3) Short A and invest everything (including the short proceeds) in B. 4) Short B and invest everything (including the short proceeds) in A
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