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Example Consider a stock and a bond. A T - bill yields a sure rate of 5 . 5 % . Stock: expected return =

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Consider a stock and a bond. A T-bill yields a sure rate of 5.5%.
Stock: expected return =15%; standard deviation =32%
Bond: expected return =9%; standard deviation =23%
Correlation coefficient =0.15.
\table[[,E(r),
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