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The expected return of the market portfolio is 10% p.a. and the standard deviation of returns is 16% p.a. The risk-free rate is 5% p.a.

The expected return of the market portfolio is 10% p.a. and the standard deviation of returns is 16% p.a. The risk-free rate is 5% p.a. An investor has $80,000, borrows a further $20,000 at the risk-free rate and invests the entire $100,000 in the market portfolio. 


Calculate the expected return and standard deviation of returns of the resultant combined portfolio.

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