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Suppose that Microsoft's stock has an expected return of 24% and a volatility of 14% while Pepsi has an expected return of 5% and volatility

Suppose that Microsoft's stock has an expected return of 24% and a volatility of 14% while Pepsi has an expected return of 5% and volatility of 10%. If these two stocks were perfectly negatively correlated (ie the correlation coefficient is -1),

a. Calculate the portfolio weights that remove all risk

b. If there is no arbitrage opportunities, what is the risk-free rate of interest in this economy?

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