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6. Assume that the expected rate of return on the market portfolio is 23% and the rate of return on Tbills (the risk-free rate) is

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6. Assume that the expected rate of return on the market portfolio is 23% and the rate of return on Tbills (the risk-free rate) is 7%. The standard deviation of the market is 32%. Assume that the market portfolio is efcient. (a) What is the equation of the capital market line? Answer. (b) i. If an expected return of 39% is desired, what is the standard deviation of the cor- responding portfolio?

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