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Capital market line and achieve

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If E(Rm) = .07 , sigmaM = .18 and rf = .03, how can you invest $1,000 along the capital market line and achieve E(Rp) = .10? Note: sigmaM is the standard deviation of market return. rf is the risk free rate.

a. borrow $200 at the risk free rate and invest $1200 in the market portfolio

b. borrow $750 at the risk free rate and invest $1750 in the market portfolio

c. borrow $666.66 at the risk free rate and invest $1666.66 in the market portfolio

d. borrow $400 at the risk free rate and invest $1400 in the market portfolio

Reference no: EM131179381

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