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3. Consider the following two risky portfolios: * Portfolios Cash Flow at year 2 Probability $80,000 40% Portfolio A $120,000 60% $75,000 50% Portfolio B
3. Consider the following two risky portfolios: * Portfolios Cash Flow at year 2 Probability $80,000 40% Portfolio A $120,000 60% $75,000 50% Portfolio B $125,000 50% Mr. Johns, a portfolio investor, expects a return of 11%. Assume that risk-free rate is 4%. Mr. Johns is willing to pay for portfolios B and A respectively: a $75,614.37; $78,638.94 b. $84,408.73; $87,343.87 c. $87,343.87; $90,837.63 d. $81,162.24; $84,408.73 e. None of the above
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