Problem 2: Suppose there are many stocks in the security market and that the character- istics of stocks A and B are given by E(ra) 0.04. E(re) 0.08, (ra) 0.6, (r) 0.9 and Corr(rA, rB) =-1. Here represents standard deviation. Investors are not constrained to invest their wealth in only one security but they can invest it accross different securities. Is it possible in this economy to invest at a risk-free rate? If yes, what will be the risk free rate? Explain