In a World Where Riskless Borrowing or Lending Is Possible

question 2

Multiple Choice

In a world where riskless borrowing or lending is possible at 6%, if the expected return to the optimal risky asset portfolio is 12%, and you want a target return of 15%, what must you do?

• A) Borrow an amount equal to 25% of your wealth and put 125% of your wealth in the risky portfolio.
• B) Borrow an amount equal to 50% of your wealth and put 150% of your wealth in the risky portfolio.
• C) Invest half your wealth in the risky portfolio and the other half in bonds.
• D) Invest 75% of your wealth in risky assets and 25% in bonds.

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Definitions:

Fast Mapping

The way in which children quickly form an idea of the meaning of an unfamiliar word they hear in a familiar and highly structured social interaction.

Babbling

Early stage of language development where infants produce sounds or syllables repeatedly without specific meaning.

Babbling

An early stage in language acquisition where infants produce sounds or syllables repetitively, which precedes the development of spoken words.

Scaffolding

A teaching method that involves providing learners with temporary support until they can perform tasks independently.