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:

Strategic Proactivity

An approach whereby an organization anticipates future challenges or opportunities and actively shapes its strategies to address them.

Civil Corporation

A corporation that integrates social and environmental concerns in its business operations and interactions with its stakeholders.

Corporate Governance

The set of guidelines, procedures, and systems used to govern and manage a corporation.

Transparent Decision Making

A principle in which the rationale behind decisions is openly shared with relevant stakeholders to foster trust and inclusivity.