Consider the single factor APT. Portfolio A has a beta of 1.8 and an expected return of 22%. Portfolio B has a beta of 6 and an expected return of 18%. The risk-free rate of return is 12%. If you wanted to take advantage of an arbitrage opportunity, you should take a short position in portfolio. and a long position in portfolio. Multiple Choice O A;B BB A:A

Consider the single factor APT. Portfolio A has a beta of 1.8 and an expected return of 22%. Portfolio B has a beta of 6 and an expected return of 18%. The risk-free rate of return is 12%. If you wanted to take advantage of an arbitrage opportunity, you should take a short position in portfolio. and a long position in portfolio. Multiple Choice O A;B BB A:A

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Concept explainers

Portfolio Management

Portfolio management is the process by which an investor decides that how the person will invest in a variety of assets in order to get a desired return in the future. A portfolio means a pool of assets that includes securities, bonds, and other investment instruments which helps in risk minimization of the money that has been invested. In other words, it can be said that a portfolio means a combination of assets in which an investor decides to invest their money in order to get a lump sum return in the future or even a series of cash flow that the person is expecting at the end of their job life.

Question

Consider the single factor APT. Portfolio A has a beta of 1.8 and an expected return of 22%. Portfolio B has a beta of 6 and an
expected return of 18%. The risk-free rate of return is 12%. If you wanted to take advantage of an arbitrage opportunity, you
should take a short position in portfolio.
and a long position in portfolio
Multiple Choice
A;B
BB
A:A
BA

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