Question: What is a risk premium? Why does such a premium exist between interest rates on mortgages and rates of return earned on equity invested in

  1. What is a risk premium? Why does such a premium exist between interest rates on mortgages and rates of return earned on equity invested in real estate? ( B6f CH.22 )

  2. Mean returns for portfolios are calculated by taking the weighted average of the mean returns for each investment in the portfolio. Why wont this approach work to calculate the standard deviation of portfolio returns? ( B&F ch.22)

Please explain clearly and step by step



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