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Supposethatmanystocksaretradedinthemarketandthatitispossibletoborrowattherisk-freerate,r.Thecharacteristicsoftwoofthestocksareasfollows(Supposethesetwostocksare perfectlynegativecorrelated ): StockExpectedReturnStandardDeviation A 4% 20% B 7% 30% a. How can we construct a riskless portfolio? b. Calculate the expected rate of return

Supposethatmanystocksaretradedinthemarketandthatitispossibletoborrowattherisk-freerate,r.Thecharacteristicsoftwoofthestocksareasfollows(Supposethesetwostocksareperfectlynegativecorrelated):
StockExpectedReturnStandardDeviation

A 4% 20%

B 7% 30%

a. How can we construct a riskless portfolio?

b. Calculate the expected rate of return on this risk-free portfolio?

Can you help me to do this? Thank you!

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