Suppose Intel's stock has an expected return of $26\%$ and a volatility of $50\%,$

while Coca$-$Cola's has an expected return of $6\%$ and a volatility of $25\%.$ If these

two stocks were perfectly negatively correlated $($i$.$e$.,$ their correlation

coefficient is $-1),$

a$.$ calculate the portfolio weights that remove all risk.

b$.$ what is the risk$-$free rate of interest in this economy?

Answer rating: 100% (QA)

aSince the stock are perfectively negative correlated we can use the formula for the weights of a ri... View the full answer