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Based on the information given in the following table, what is the expected return on a portfolio with 25% in stock A, 50% in stock
Based on the information given in the following table, what is the expected return on a portfolio with 25% in stock A, 50% in stock B, and the rest in the risk-free asset based on CAPM? Stock A B
Correlation with the market | 0.5 | 1.0 |
Average Annual Return (Based on Historical Data) | 10% | 8% |
Standard Deviation (Yr.) | 15% | 15% |
Correlation (A, B) | 0.5 | |
The standard deviation of the market (%/Yr.) | 15% | |
Risk-Free Rate (Yr.) | 3% | |
Risk Premium on the Market (Yr.) | 5% |
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