When analyzing the trade off between risk and return on investment, the slope of the budget line

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    is called the price of risk because it tells us how much extra risk an investor must incur to earn a higher expected rate of return on investments.
     is equal to the difference between the expected rate of return on risky investments and safe investments, divided by the standard deviation of the portfolio, or (Rm-Rf)/dp
     is equal to the difference between the expected rate of return on risky investments and safe investments, divided by the standard deviation of the risky investments, or (Rm-Rf)/dm
     Numbers 1 and 3.
asked Jun 2, 2013 in Economics by anonymous
    

1 Answer

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Numbers 1 and 3.
answered Jun 3, 2013 by Xyz ~Expert~ (3,650 points)



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