By combining lending and borrowing at the risk-free rate with the efficient portfolios, we can
I. extend the range of investment possibilities
II. change efficient set of portfolios from being curvilinear to a straight line.
III. provide a higher expected return for any level of risk except the tangential portfolio
A) I only
B) I and II only
C) I, II, and III
D) none of the above

Question

By combining lending and borrowing at the risk-free rate with the efficient portfolios, we can 
I. extend the range of investment possibilities
II. change efficient set of portfolios from being curvilinear to a straight line.
III. provide a higher expected return for any level of risk except the tangential portfolio
A) I only
B) I and II only
C) I, II, and III
D) none of the above

Quizplus · Accepted Answer

By combining lending and borrowing at the risk-free rate with the efficient portfolios, we can
I. extend the range of investment possibilities
II. change efficient set of portfolios from being curvilinear to a straight line.
III. provide a higher expected return for any level of risk except the tangential portfolio

By Combining Lending and Borrowing at the Risk-Free Rate with the Efficient