The Impact on Total Portfolio Expected Return and Risk If

question 14

Multiple Choice

The impact on total portfolio expected return and risk if you borrow money at the risk free rate and invest in the optimal risky portfolio would be

• A) increase both expected return and risk
• B) increase expected return only
• C) increase risk only
• D) decrease risk but increase expected return

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Definitions:

Implied Warranty

A legal term referring to a warranty that is not expressly stated but is assumed by law to exist in a sale.

Release

A legal agreement where one party forfeits the right to pursue a claim or lawsuit against another party.

Damages

A monetary compensation awarded by a court to a person who has suffered a loss or injury.

Incidental Beneficiary

A person or entity that indirectly gains a benefit from a contract to which they are not a party, without the contract specifically intending such benefit.