Question: the Expected Return on the Market Portfolio = 9.00% so that the Market Risk Premium = 5.50%. If the supply of the Risk-Free Asset decreases

the Expected Return on the Market Portfolio = 9.00% so that the Market Risk Premium = 5.50%. If the supply of the Risk-Free Asset decreases for the next period, while investor demand remains unchanged, the Risk-Free Rate would be expected to:

Increase in the second period.

Decrease in the second period.

Remain Unchanged in the second period.

Cannot be determined.

None of the above answers is correct.

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