An investor can design a risky portfolio based on two


An investor can design a risky portfolio based on two stocks, A and B. Stock A has an expected return of 21% and a standard deviation of return of 39%. Stock B has an expected return of 14% and a standard deviation of return of 20%. The correlation coefficient between the returns of A and B is .4. The risk-free rate of return is 5%. What is the expected return on the optimal risky portfolio is approximately?

Please show all work (not excel).

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Financial Management: An investor can design a risky portfolio based on two
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