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The expected return for the market is 12 percent with a standard deviation of 21 percent. The risk-free rate is 8 percent. Information is available

The expected return for the market is 12 percent with a standard deviation of 21 percent. The risk-free rate is 8 percent. Information is available for five mutual funds, all assumed to be efficient:

Mutual Funds (%)
Affiliated 14
Omega 16
Ivy 21
Value Line Fund 25
New Horizons 30
  1. Calculate the slope of the CML.
  2. Calculate the expected return for each fund.
  3. Rank the funds in increasing order of risk.
  4. Do any of the funds have the same expected return as the market? Why?

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