Calculate the expected return of portfolio

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Suppose that the borrowing rate that your client faces is 9%. Assume that the S&P 500 index has an expected return of 13% and standard deviation of 25%. RF=5% 1) If the client budget is 400,000 and he choose to enter a leveraged position by  borrowing an additional  20,000. calculate the expected return of this portfolio
2) Draw the CAL accounting for the higher borrowing rate and showing the position of a client who will choose to borrow and who will invest in both the index and money market fund.

Reference no: EM13684253

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