why did they not borrow at the risk free rate in 2B on page 203 in CFAI Reading #38?
I think this question was already asked . The whole point is that you do borrow at the risk free rate ( and under no arb condition you make just enough to pay off the loan. i.e. your rate of return is the risk free rate.) Question 2C then goes on to show that earning only the risk free rate does not lead to the right price over the next few months , so something else is up in the widget market
Thanks again to janakisri.