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15-04-2020
Business

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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 14% 5%
B 15% 13%
Correlation = –1
(a) 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.)

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Busiyijide Busiyijide

15-04-2020

Answer:

15.53%

Explanation:

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