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Q3. Suppose you purchase $1,000 of security A, purchase $500 of security B, and borrow $500. The correlation of A with B is 0.7. The

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Q3. Suppose you purchase $1,000 of security A, purchase $500 of security B, and borrow $500. The correlation of A with B is 0.7. The risk-free interest rate is 5%. Compute the expected return and variance of this portfolio. Variance E(r) 0.25 0.10 0.49 0.16

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