You invest $100 in a risky asset with an expected rate of return of 0.12 and a standard deviation of 0.15 and a T-bill with a rate of return of 0.05. A portfolio that has an expected outcome of $115 is formed by

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The expected outcome of $115 from an initial investment of $100 represents a 15% return. Option C, borrowing $43 at the risk-free rate and investing a total of $143 in the risky asset, aligns with achieving this target return. By leveraging the investment in the risky asset, which has an expected rate of return higher than the risk-free rate, the investor can potentially reach the desired outcome. This approach involves using leverage to amplify returns, assuming the risky asset performs as expected.

You Invest $100 in a Risky Asset with an Expected