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The risk-free rate is 2% and there are only two stocks in the market, ABC and XYZ. -There are 400 shares of ABC, each worth
The risk-free rate is 2% and there are only two stocks in the market, ABC and XYZ.
-There are 400 shares of ABC, each worth $1.47. The expected return of ABC is 2.32%.
-There are 100 shares of XYZ, worth $.955. The expected return of XYZ is 4.76%
A. What are the portfolio shares of ABC and XYZ in the market portfolio?
B.What is the expected return of the market portfolio?
C.If CAPM holds, what is the beta of ABC and the beta of XYZ?
D.What is the expected accumulated value (E(D1)+E(P1)) for ABC and for XYZ?
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