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4. Assume that the risk-free rate of interest is 7%, the mean rate of return and the standard deviation of the market portfolio are 12%
4. Assume that the risk-free rate of interest is 7%, the mean rate of return and the standard deviation of the market portfolio are 12% and 17% respectively. Assume that the market portfolio is efficient (a) Find the equation of the capital market line. (b) If the standard deviation of the rate of return of a risky asset A is 30%, then find the mean rate of return predicted by the capital market line. (c) How will you allocate $2000 to achieve the mean rate of return obtained in part (b)? (d) If you invest $500 in the risk-free asset and $1500 in the market portfolio, how much money do you expect to have at the end of the year
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