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Calculate reward-to-volatility ratio in the borrowing region

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An investor has AU$200,000 to invest. She borrowed an additional AU$100,000 at 6% rate and invest the entire amount in a risky portfolio. Risk-free rate is 4% in the lending region and 6% in the borrowing region, and return and standard deviation of the risky portfolio are 10% and 18% respectively. Calculate reward-to-volatility ratio in the borrowing region

Reference no: EM133000630

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