Borrowing and lending at a risk-free rate

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Reference no: EM131012915

A risk-averse investor is evaluating the following investments: Portfolio A: E(R_A) = 14 percent, Sigma(R_A) =15 Portfolio B: E(R_B) = 10 percent, Sigma(R_B) = 8 Portfolio C: E(R_C) =10 percent, Sigma(R_C) = 7 Explain the choice among Portfolios A, B, and C using the Markowitz decision rule. Explain the choice among Portfolios A, B, and C assuming that borrowing and lending at a risk-free rate of R_F = 2 percent is possible.

Reference no: EM131012915

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