If E(Rm) = .07 , sigmaM = .18 and rf = .03, how can you invest $1,000 along the capital market line and achieve E(Rp) = .10? Note: sigmaM is the standard deviation of market return. rf is the risk free rate.
a. borrow $200 at the risk free rate and invest $1200 in the market portfolio
b. borrow $750 at the risk free rate and invest $1750 in the market portfolio
c. borrow $666.66 at the risk free rate and invest $1666.66 in the market portfolio
d. borrow $400 at the risk free rate and invest $1400 in the market portfolio