Assume a market in which the assumptions of the portfolio theory hold and that is in equilibrium. Going short is allowed

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Assume A Market In Which The Assumptions Of The Portfolio Theory Hold And That Is In Equilibrium Going Short Is Allowed 1 (32.07 KiB) Viewed 30 times

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 20% + ++ 0% 10% 30% 40% O(R) Rational investor X holds efficient portfolio P1. Which of the following statements is correct? In order to construct P1, investor X goes long in risk-free asset F and short in M. 1.0p 다. In order to construct P1, investor X goes long in risk-free asset Fand long in M. In order to construct P1, investor X goes short in risk-free asset F and long in M.