Suppose that there are many stocks in the security market and that the characteristics of stocks A and Bare given as follows:

Stock	Expected Return				Standard Deviation
A		9	%			3	%
B		20				13
	Correlation = 1

Suppose that it is possible to borrow at the risk-free rate, r_f . What must be the value of the risk-free rate? (Hint: Think about constructing a risk-free portfolio from stocks A and B.) (Do not round intermediate calculations. Round your answer to 3 decimal places. Omit the "%" sign in your response.)

Risk-free rate

%