Problem $6-14($Algo$)$

Suppose that many stocks are traded in the market and that it is possible to borrow at the risk$-$free rate, $r_f.$ The characteristics of two

of the stocks are as follows:

Required:

a$.$ Calculate the expected rate of return on this risk$-$free portfolio? $($Hint: Can a particular stock portfolio be formed to create a

"synthetic" risk$-$free asset?$)($Round your answer to $2$ decimal places.$)$

Answer is complete but not entirely correct.