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Suppose you have two stocks, A and B, with expected returns E(R A) = 10% and E(R B)= 25%, and variances A = 0.15 and

Suppose you have two stocks, A and B, with expected returns E(R A) = 10% and E(R B)= 25%, and variances A = 0.15 and variance B= 0.35. In addition, the returns for these two stocks are perfectly negatively correlated. What must the risk-free rate of return be in this economy so that there are no arbitrage opportunities?

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