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Business, 26.07.2019 04:30 shrafe

Suppose that there are many stocks in the security market and that the characteristics of stocks a and b are given as follows: stock expected return standard deviation a 11 % 7 % b 17 11 correlation = –1 suppose that it is possible to borrow at the risk-free rate, rf. what must be the value of the risk-free rate? (hint: think about constructing a risk-free portfolio from stocks a and b.) (do not round intermediate calculations. round your answer to 3 decimal places.)

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