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2. Suppose a rm is planning to invest $ 1,000,000 in a risk free and a risky asset A. Assume that ,sz = 5%, MA

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2. Suppose a rm is planning to invest $ 1,000,000 in a risk free and a risky asset A. Assume that ,sz = 5%, MA = 12% and 0A 2 25%. The company has capital reserves to cover $ 200, 000 but no more and would as a result to loose this amount or more with a probability equal to 0.01. If 3,, = wRA + (1 W)f, the return of their investment, is normally distributed, nd the value of no that achieves their requirement

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