(Algo) Suppose that many stocks are traded in the market and that it is possible to borrow at the risk-free rate, r. The characteristics of two of the stocks are as follows: Stock Expected Standard

8 Problem 6-14 (Algo) 9.09 Doints Suppose that many stocks are traded in the market and that it is possible to borrow at the risk-free rate, r, The characteristics of two of the stocks are as follows: Stock Expected Standard Return Deviation 78 105 700 Correlation- BOOK Print Required: a. Calculate the expected rate of return on this risk free portfolio? (Mint Con a particular stock portfolio be formed to create a "synthetic risk-free asset? (Round your answer to 2 decimal places.) Heferences Rate of return 1% b. Could the equilibrium ry be greater than rate of return? Yes No