The impact of risk free lending on the efficient set changes the Markowitz model such that the efficient set now consists of a _________ going from the risk free asset to a curved segment.

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The impact of risk free lending on the efficient set changes the Markowitz model such that the efficient set now consists of a curved segment. This is because the introduction of a risk-free asset allows for borrowing/lending at a risk-free rate, which can be combined with risky assets to form portfolios that have higher expected returns than the risk-free rate with the same level of risk. The resulting efficient set will be a curved line that starts at the risk-free rate and connects with the risky portfolio efficient set (the efficient frontier).

The Impact of Risk Free Lending on the Efficient Set