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^U

= .00640

Based on these calculations, the standard deviation for L is aL = ,,.1296 = .36 = 36%. The standard deviation for U is much smaller, a-u = ,, .0064 = .08 or 8%.

Ross et al.: Fundamentals V. Risk and Return 13. Return, Risk, and the © The McGraw-Hill of Corporate Finance, Sixth Security Market Line Companies, 2002

Edition, Alternate Edition

420 PART FIVE Risk and Return

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