CAL calculations

[archived_user]

Portfolio Management, page 387 of CFAI book, part 6 of problem 5B
can someone please explain how they find out that investor must borrow 4 million dollars

 

[archived_user]

From Q5, your w(T) = 1.4, meaning you have to borrow 40% of your initial wealth.
Q6, you already have 10mil, so the amount to borrow is 4mil.

 

[archived_user]

right… thanks