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Consider a T-Bill with a rate of return of 2% and the following risky secuirties: Security...

Consider a T-Bill with a rate of return of 2% and the following risky secuirties:

Security A: E(r) = .14 Variance = .07

Security B: E(r) = .11 Variance = .05

Security C: E(r) = .09 Variance = .02

Security D: E(r) = .13 Variance = .06

The investors must develop a complete portfolio by combing the risk-free asset with one of the securities mentioned above. The security the investor should chose as part of his complete portfolio to achieve the best CAL would

a) Security A

b) Security B

c) Security C

d) Security D

Solutions

Expert Solution

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 5 months ago
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