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Suppose there are two common stocks available for investment, stock A and stock B, with the following characteristics: Calculate the portfolio expected return and standard
Suppose there are two common stocks available for investment, stock A and stock B, with the following characteristics: Calculate the portfolio expected return and standard deviation of return for each of the following portfolios: Sketch {this does not have to be a work of art, but try to be careful) the feasible set of all portfolios composed of A and B. Suppose that there is now the opportunity to borrow or lend at the risk-free rate of return, which is 10%. Show on your sketch in part (B) how this changes the investment opportunities available. (Be sure to clearly label this "PART C".) Assume you are a rational investor and can invest in stock A, stock B, the risk-free security, or any combination thereof. Further assume that you have $150,000 and decide to invest $60,000 in the risk-free security and $90,000 in risky securities. Approximately how much money will you invest in Security B? Briefly explain how you arrived at your
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