14 Assume a market in which the assumptions of the portfolio theory hold and that is in equilibrium. Going short is allo
Posted: Mon Mar 21, 2022 4:33 pm
- 14 Assume A Market In Which The Assumptions Of The Portfolio Theory Hold And That Is In Equilibrium Going Short Is Allo 1 (147.46 KiB) Viewed 36 times
14 Assume a market in which the assumptions of the portfolio theory hold and that is in equilibrium. Going short is allowed. In the figure below M stands for the Market Portfolio, RF for the risk-free return, and CML (which is the line that starts in RF and runs through P1. M. and P2) stands for the Capital Market Line. E(R) CML P2 M P1 RF + ++ ++ 10% 20% 30% 40% 0% O(R) Rational investor X holds efficient portfolio P1. 1.0p Which of the following statements is correct? O In order to construct P1. investor X goes short in risk-free asset F and long in M. O In order to construct P1, investor X goes long in risk-free asset Fand short in M. O In order to construct P1. investor X goes long in risk-free asset F and long in M.