Please Show all work so I understand for the test. 1. (10 points)...
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Finance
Please Show all work so I understand for the test.
1. (10 points) Starting with a graph of the efficient frontier in risk-return space, explain how investors who have the ability to borrow or lend at the risk free rate may find an optimal portfolio based on their level of risk aversion. (You should include the market portfolio, capital market line and indifference curves). In addition, show how the formula for the capital market line is determined. (Use the back of the page if necessary)
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