Compute the risk-free rate of return

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The expected return of stock A is 20% per year and the stock's annual standard deviation is 45%. There is also a risk-free asset. When a complete portfolio is formed with a portfolio weight on the risky asset of 35%, the expected return on the complete portfolio is 8.0%.

(a) Compute the risk-free rate of return.

(b) Compute the annual standard deviation of the complete portfolio above

(c) Compute the market price of risk (i.e., the Sharpe ratio)?

Reference no: EM131895748

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