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Suppose in a hypothetical economy, there exist two financial assets A and B, and their returns are perfectly negative correlated with AB =-1 . The

  1. Suppose in a hypothetical economy, there exist two financial assets A and B, and their returns are perfectly negative correlated with AB=-1. The following information is also given: E(rA)=8%, ErB=2%, A=15% B=9%. What is the equilibrium risk-free rate in this economy?

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