You compute the expected returns and volatilities of stocks A and B as E(RA)=3.2%, E(RB)=9.3%,...
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You compute the expected returns and volatilities of stocks A and B as
E(RA)=3.2%, E(RB)=9.3%, (RA)=12.4%, and (RB)=5.5%.
The correlation between RA and RB is negative and equal to 1. Combine the two assets, A and B, to get a risk-free portfolio. What must be the value of the risk-free borrowing and lending rate? Report your answer in decimal form and round to 4 decimal places.
You compute the expected returns and volatilities of stocks A and B as E(RA)=3.2%, E(RB)=9.3%, o(RA)=12.4%, and o(RB)=5.5%. The correlation between RA and RB is negative and equal to -1. Combine the two assets, A and B, to get a risk-free portfolio. What must be the value of the risk-free borrowing and lending rate? Report your answer in decimal form and round to 4 decimal places
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