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There are two investment alternatives: First alternative: a treasury bill that generates 6% rate of return with a probability of 1.0. Second alternative: a risky
There are two investment alternatives: First alternative: a treasury bill that generates 6% rate of return with a probability of 1.0. Second alternative: a risky portfolio that either generates 15% rate of return with a probability of 0.6 or 5% with a probability of 0.4. The risk premium (i.e. excess return over the risk-free rate) on the risky portfolio (.e. second alternative) is %. Your answer must be in one digit with no decimal. That is, you answer must be in this format: x 5 Some diversification benefits exist as long as the correlation between the securities is 1) less than 1 2) 1 3) less than or equal to 0 4) be
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