Suppose that there are many stocks in the security market and that the characteristics of stocks A and B are given as follows: Stock A E(r) 14%, Std Dev 6%. Stock B, E(r) 18% ;Std Dev 10% . Suppose that it is possible to borrow at the risk-free rate, r. What must be the value of the risk-free rate? (Hint: Think about constructing a risk-free portfolio from stocks A and B.) Do not round intermediate calculations. Round your answer to 3 decimal places - truncate trailing zeros. Do not enter percent signs (no %)
