353,661 views
22 votes
22 votes
Suppose you borrow at the risk-free rate an amount equal to your initial wealth and invest in a portfolio with an expected return of 16 percent and a standard deviation of returns of 20 percent. The risk-free asset has an interest rate of 4 percent. Calculate the expected return and the standard deviation of the resulting portfolio. (2 2)

User Batman Rises
by
2.9k points

1 Answer

11 votes
11 votes

Answer:

The answer is

2(16) - (4) =28%

User Nati Dykstein
by
2.8k points