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Borrowing and Lending Possibilities

Borrowing and Lending Possibilities

by Md. Atiqur Rahman Sumon -
Number of replies: 0

Risk free assets
ØCertain-to-be-earned the expected return and variance of the return of zero
ØNo correlation with risky assets
ØUsually proxied by a Treasury security
amount to be received at maturity is free of default risk, known with certainty
adding a risk-free asset extends and changes the efficient frontier