A portfolio that has an expected outcome of $115 is formed by
A)Investing $100 in the risky asset.
B)Investing $80 in the risky asset and $20 in the risk-free asset.
C)Borrowing $43 at the risk-free rate and investing the total amount ($143) in the risky asset.
D)Investing $43 in the risky asset and $57 in the riskless asset.
E)such a portfolio cannot be formed.

Question

Quizplus · Accepted Answer

By borrowing $43 at the risk-free rate and investing $143 in the risky asset, the expected outcome can be $115 if the risky asset has an expected return that aligns with this outcome.

A Portfolio That Has an Expected Outcome of $115 Is