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3. Assume many stocks in the market, two of which have the following characteristics: Expected Return (%) 10 15 Standard Deviation (%) | 10 Stock

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3. Assume many stocks in the market, two of which have the following characteristics: Expected Return (%) 10 15 Standard Deviation (%) | 10 Stock A Stock B 20 Stocks A and B are perfectly negatively correlated (correlation = -1). What is the market risk-free rate? (hint: how can you construct a risk-free portfolio?)

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