Suppose that there are many stocks in the security market and that the characteristics of stocks A and B are as follows: the expected return on A is 10% and it has a standard deviation of 5%, while the expected return on B is 15% and it has a standard deviation of 10%. The return corre- lation between stocks A and B is 1. Suppose that it is possible to borrow at the risk-free rate; what must be the value of the risk free rate?

QUESTION 5 Suppose that there are many stocks in the security market and that the characteristics of stocks A and B are as follows: the expected return on A is 10% and it has a standard deviation of 5%, while the expected return on B is 15% and it has a standard deviation of 10%. The return corre- lation between stocks A and B is -1. Suppose that it is possible to borrow at the risk-free rate; what must be the value of the risk free rate