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2. Consider an economy with 2 risky assets and one risk free asset. Two investors, A and B, have mean-variance utility functi

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a As per Capital Market Line [cmi) Equation Rp = Ret Rm-R1 x + 6pm Where, Rp = Retum of Portfolio Rp = Risk Free Rate Rm a RaFor Portfolio Q 01 = Rp + Rm. Rt 00.25 0.1 = Rp +0.25 a simultaneously, By solving equation 1&2 we get 0.2= Rf +0.45a 0.1=Rf+A Sharpe Ratio of Investor - 0.2 - 0.19775 0.45 = 0.005

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