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Part II. Problems (58 points) Problem #15 (16 points) Suppose that many stocks are traded in the market and that it is possible to borrow
Part II. Problems (58 points) Problem #15 (16 points) Suppose that many stocks are traded in the market and that it is possible to borrow at the risk- free rate. The characteristics of two stocks are as follows: Stock Expected Return Standard Deviation A 8% 30% B 13% 70% Correlation = -1 A) Compute the lowest standard deviation (STD) on a portfolio consisting of stocks A and B. (10 pts) B) Find the equilibrium risk-free rate. (6 pts) was com
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