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The expected return on the market portfolio is 9.7%, and you can borrow money at a rate of 4.3%. Construct a $100,000 portfol

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Answer #1

Let w be the weight of market portfolio

w*9.7%+(1-w)*4.3%=12.67%
=>w=(12.67%-4.3%)/(9.7%-4.3%)
=>w=1.55

Hence, Borrow $55000 Invest $155000 in the market portfolio

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