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Asset A offers an expected rate of return of 10% with a standard deviation of 25%. Asset B offers an expected rate of return of
Asset A offers an expected rate of return of 10% with a standard deviation of 25%. Asset B offers an expected rate of return of 5% with a standard deviation of 30%. Assume that the risk-free interest rate is zero.
Given that risk and return data of the two assets, would anyone choose to hold Asset B? Explain your answer graphically. [Hint: Can provide verbal support to the graph, if necessary, in no more than two lines.]
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