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2. Market portfolio consists only of two stocks: stock A and B. Stock A has an expected return of 10% and a volatility of 20%.

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2. Market portfolio consists only of two stocks: stock A and B. Stock A has an expected return of 10% and a volatility of 20%. Stock B has an expected retuin of 16% and a volatility of 40%. Both stocks are independent each other. The risk-free rate is 3%. Market portfolio weights for stocks A and B are equal. (1) Is the market in equilibrium or not? (ii) If not, which stock is over- priced one

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