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A portfolio with a standard deviation of 32% is made up of the market portfolio…

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Wize University Introduction to Finance Textbook > CAPM

Risk-Free Borrowing

3 Activities

A portfolio with a standard deviation of 32% is made up of the market portfolio and the risk free rate. The risk free rate is 5% and the market expected return is 20% with a standard deviation of 16%.
How much of the portfolio is invested in each asset?
Market portfolio
%
Risk free assets
%
More Risk-Free Borrowing Questions:
You have constructed a portfolio with 180% invested in the market portfolio and the rest borrowed at the risk free rate. If the expected return and standard deviation of the market are 15% and 12%, and the risk free rate is 4%, what is the standard deviation of your portfolio?
You have constructed a portfolio with 180% invested in the market portfolio and the rest borrowed at the risk free rate. If the expected return and standard deviation of the market are 15% and 12%, and the risk free rate is 4%, what is the expected return of your portfolio?