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1. What is the effective rate of return when the APR is 30% when: a. Compounded monthly b. Compounded continuously 2. Suppose you have the

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1. What is the effective rate of return when the APR is 30% when: a. Compounded monthly b. Compounded continuously 2. Suppose you have the following return sequences, calculate the arithmetic return and geometric returns 1 2 3 Amal Return 15% 26% 9% -25% -23% 3. Explain the graph below. Talk about market risk, firm-specific risk, diversification and number of stocks in a portfolio: 100 -50 Average Portfolio Standard Deviation (1) ou u8088898 Risk Compared to a One-Stock Portfolio (5) 2 100 200 300 400 500 600 700 800 900 1,000 4 6 8 10 12 14 16 18 20 Number of Stocks in Portfolio 4. An investor can design a risky portfolio based on two stocks, A and B. Stock A has an expected return of 18% and a standard deviation of return of 20%. Stock B has an expected return of 14% and a standard deviation of return of 5%. The correlation coefficient between the returns of A and B is.50. Please follow examples from the PPT and draw a brief efficient frontier of using stock A and B below

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