Consider a Single Factor APT

question 45

Multiple Choice

Consider a single factor APT.Portfolio A has a beta of 1.0 and an expected return of 16%.Portfolio B has a beta of 0.8 and an expected return of 12%.The risk-free rate of return is 6%.If you wanted to take advantage of an arbitrage opportunity, you should take a short position in portfolio __________ and a long position in portfolio _______.

• A)A; A
• B)A; B
• C)B; A
• D)B; B

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Definitions:

Vertebral Posterior Arch

The portion of a vertebra that encapsulates and protects the spinal cord, forming the backside of the spinal canal.

Drowsiness

A feeling of being sleepy and lethargic, often leading to a decreased level of consciousness.

Nervous System

A complex network of nerves and cells that transmit signals between different parts of the body.

Involuntary Bodily Functions

These are physiological processes that are not under conscious control, such as breathing, heartbeat, and digestion.