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please answer all questions. Problem 6.3 (a) Suppose that many stocks are traded in the market and that it is possible to borrow at the
please answer all questions.
Problem 6.3 (a) Suppose that many stocks are traded in the market and that it is possible to borrow at the risk-free rate, ry. The characteristics of two of the stocks are as follows: Stock Expected Return 6% Standard Deviation 25% 75% 10% Correlation-1 Calculate the expected rate of rotum on this risk-free portfolio? (Mint Can a particular stock portfolio be substituted for the risk-free asset?) (Enter your answer in percentage points. Round your answer to 2 decimal places.) QUESTION 6 Problem 6.3 (b) Suppose that many stocks are traded in the market and that it is possible to borrow at the risk-fron rate, ry. The characteristics of two of the stocks are as follows: Stock Expected Return 6% 10% Standard Deviation 25% 75% Correlation-1 Could the equilibrium ry be greater than 7.00%? Yes NO Step by Step Solution
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