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4. Consider the following two risky portfolios. Mr. Henry, a portfolio investor, expects a return of 14%. Assume that risk-free rate is 6%. Mr. Henry

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4. Consider the following two risky portfolios. Mr. Henry, a portfolio investor, expects a return of 14%. Assume that risk-free rate is 6%. Mr. Henry is willing to pay for portfolios KYC and AXA respectively: * Portfolios Portfolio KYC Cash Flow at year 3 $150,000 $210,000 $90,000 $120,000 Probability 50% 50% 40% 60% Portfolio AXA A) $180,000; $108,000 O B) $121,494.8; $72,896.9 O C) $72,896.9; $121,494.8 D) None of the above

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