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A portfolio that is invested 5/9 in Stock A and 4/9 in Stock B has an expected return of 20%. Use the information given on

A portfolio that is invested 5/9 in Stock A and 4/9 in Stock B has an expected return of 20%.

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Use the information given on the table and answer the followings: a. What is the risk-free rate? (4 marks) b. What is the expected return on stock A? (4 marks) c. What is the expected return on the market portfolio? (4 marks)

Stock A Stock B Expected Return ? 28% Variance 0.0484 0.0324 Beta 0.6 1.5

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