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What is the equation of the capital allocation line

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Reference no: EM132798419

A portfolio's expected risk premium is 7% and its standard deviation is 35%. The risk free rate is 2%. What is the equation of the Capital Allocation Line going through the Portfolio?

The correct answer= E(rc)= 0.02 + 0.2*sigma(c)

Please, explain how to find this equation.

Reference no: EM132798419

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