Suppose that there are many stocks in the security market and that the characteristics of stocks...

Suppose that there are many stocks in the security market and that the characteristics of stocks A and B are given as follows:

Stock	Expected Return	Standard Deviation
A	8%	12%
B	20%	24%
Correlation = -1

A) Suppose that it is possible to borrow at the risk-free rate. What must be the value of the risk-free rate?
B) What are the risk and return of this minimum risk portfolio?

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Expert Solution

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

jeff jeffy answered 1 year ago

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