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Business, 01.07.2019 23:10 jessica3981

Suppose that many stocks are traded in the market and that it is possible to borrow at the risk-free rate, rƒ. the characteristics of two of the stocks are as follows: stock expected return standard deviation a 8 % 40 % b 13 % 60 % correlation = –1 a. calculate the expected rate of return on this risk-free portfolio? (hint: can a particular stock portfolio be substituted for the risk-free asset? ) b. could the equilibrium rƒ be greater than 10%?

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