Question: Usinh excel solver functiin to answer this question. 4. In the following assume that the CAPM holds and Coca-Cola and Netflix constitute the whole market.
4. In the following assume that the CAPM holds and Coca-Cola and Netflix constitute the whole market. a. Calculate three Market Portfolios using the solver function assuming risk- free rates of 0%, 1% and 2%. Give economic intuition about the Sharpe ratio. [20 marks] b. How does the composition of the market portfolio change if the risk-free rate goes up? Explain your answer. (15 marks) 4. In the following assume that the CAPM holds and Coca-Cola and Netflix constitute the whole market. a. Calculate three Market Portfolios using the solver function assuming risk- free rates of 0%, 1% and 2%. Give economic intuition about the Sharpe ratio. [20 marks] b. How does the composition of the market portfolio change if the risk-free rate goes up? Explain your answer. (15 marks)
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