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Assume both portfolios A and B are well diversified, that E ( r A ) = 15.0% and E ( r B ) = 16.8%.

Assume both portfolios A and B are well diversified, that E(rA) = 15.0% and E(rB) = 16.8%. If the economy has only one factor, and A = 1 while B = 1.2, what must be the risk-free rate? (Do not round intermediate calculations. Round your answer to 1 decimal place.)

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