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Suppose that there are only two stocks in the market and a risk free asset E(Ra)=18% , SD(Ra)=15% E(Rb)=12% , SD(Rb)=7%) COV(Ra,Rb)=0 Rf=5%, Supposed that

Suppose that there are only two stocks in the market and a risk free asset

E(Ra)=18% , SD(Ra)=15% E(Rb)=12% , SD(Rb)=7%) COV(Ra,Rb)=0

Rf=5%,

Supposed that you want to invest in a portfolio with E(Rp)=15%.

  1. Calculate the SD(Rp)

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