- CFA Exams
- CFA Level I Exam
- Topic 9. Portfolio Management
- Learning Module 63. Portfolio Risk and Return: Part II
- Subject 3. The Capital Asset Pricing Model
CFA Practice Question
For an investor borrowing money at the risk-free interest rate to invest in the market portfolio, the estimated rate of return of his portfolio is most likely to ______.
A. decrease
B. increase
C. remain unchanged
Explanation: An investor who wants to attain a higher estimated rate of return than the market portfolio may want to use leverage by borrowing money at the risk-free rate of interest.
User Contributed Comments 0
You need to log in first to add your comment.