You live in a world where three securities A,B, and C. You are provided with the following risk-return profile for the risky securities. Additionally, the correlation between securities A and B is 0, between securities A and C is 0, and between securities B and C is -1. What is the implied risk-free rate if there are no arbitrage opportunities?

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To determine the implied riskfree rate in a world with three securities A B and C and given their riskreturn profiles you can use the concept of a ris... View the full answer