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Assume the rate of return of the risk free asset as R,. Consider a portfolio c nsists of (x) percent invested in risky asset (I)
Assume the rate of return of the risk free asset as R,. Consider a portfolio c nsists of (x) percent invested in risky asset (I) and (1-x) percent in the market portfolio Derive the slope of the risk-return trade-off evaluated at market equilibrium nd show that the required rate of return on the risky asset is equal to the risk-free rate of r turn plus a risk premium. 1151
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