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The end-of-year of a risky portfolio will be either $20,000 with 25% probability or $8,000 with 75% probability. Investing in T-bill pays a return of
The end-of-year of a risky portfolio will be either $20,000 with 25% probability or $8,000 with 75% probability. Investing in T-bill pays a return of 2% A. If you require a risk premium of 9%, what is the expected rate of return? [Select] B. How much are you willing to pay for the portfolio? [Select]
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