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Unformatted text preview: 6. Assume that the expected rate of return on the market portfolio is 23% and the ' rate of return on T—bills (the riskfree rate) is 7%. The standard deviation of the
market is 32%. Assume the market portfolio is efﬁcient. a. What is the equation of the of the capital market line?
b. i. If an expected return of 39% is desired, What is the standard deviation of this position. ii. If you have $1,000 to invest, how should you allocate it to achieve
the above position? c. If youinvest $300 in the riskfree asset and $700 in the market portfolio, how
much should you expect to havé at the rand nFﬂm Vacgr? J h... 7m. GIN“ LTSuﬁ'tond “'3 GML.  V . , " " “—'—" «31.. 0.0.7 *7 0'23_9'°7‘£Q’rp .n 0'3). “=7 ens9:0“) Jpooo «H— .n __
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 Three '10
 Andrew

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