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Graph the Capital Allocation Line derived

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Question - The risky portfolio A consists of 1000 shares of BIT PLC and 4000 shares of DIMO PLC. Assume that BIT PLC has a share price of $6, an expected return of 18%, and a standard deviation of 22%. DIMO PLC has a share price of $4, an expected return of 14%, and a standard deviation of 20%. The correlation between the two is 0.6, and the risk-free rate of interest is 8%.

Required - Graph the Capital Allocation Line derived from the risk-free asset and portfolio A. (Label all axes and points carefully).

Reference no: EM132543667

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