Consider a Single Factor APT

question 11

Multiple Choice

Consider a single factor APT.Portfolio A has a beta of 2.0 and an expected return of 22%.Portfolio B has a beta of 1.5 and an expected return of 17%.The risk-free rate of return is 4%.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:

Manufacturing Cycle Efficiency

A metric that measures the efficiency of the manufacturing process by comparing value-added time to total throughput time.

Turnover

This is a measure of how quickly inventory is sold or how often employees are replaced within a business.

Investment Opportunity

A potential financial venture, project, or asset that could generate a return on investment.

Margin

The difference between selling price and cost of goods sold, often expressed as a percentage of sales, highlighting profitability.