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21) (7 points) Suppose that many stocks are traded in the market and that it is possible to borrow at the risk- free rate. The
21) (7 points) Suppose that many stocks are traded in the market and that it is possible to borrow at the risk- free rate. The characteristics of two of the stocks are as follows. Stock A has an expected return of 8% and a standard deviation of 45%. Stock B has an expected return of 9% and a standard deviation of 75%. The correlation between the returns of the two stocks is -1. What should be the equilibrium risk-free rate in the market
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