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QUESTION 26 Suppose that many stocks are traded in the market and that it is possible to borrow at the risk-free rate, rg. The characteristics

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QUESTION 26 Suppose that many stocks are traded in the market and that it is possible to borrow at the risk-free rate, rg. The characteristics of two of the stocks are as follows: Stock Expected Return Standard Deviation A 4M 404 8 6.5% 606 Correlation-1 What should be the equilibrium risk free rate? Hint: Con a particular stock portfolio be substituted for the risk-free asset? You can first provide your numerical answer. Then provide your steps - If you choose to do so, you can receive partial credit in case your numerical answer is incorrect. For the toolbar, press ALT+F 10 (PC) or ALT+FN+F10(Mac) TTTA 3 (1200) Path Wards:0

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