Consider a One-Factor Economy

question 27

Multiple Choice

Consider a one-factor economy. Portfolio A has a beta of 1.0 on the factor, and portfolio B has a beta of 2.0 on the factor. The expected returns on portfolios A and B are 11% and 17%, respectively. Assume that the risk-free rate is 6%, and that arbitrage opportunities exist. Suppose you invested $100,000 in the risk-free asset, $100,000 in portfolio B, and sold short $200,000 of portfolio A. Your expected profit from this strategy would be

• A) −$1,000.
• B) $0.
• C) $1,000.
• D) $2,000.

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Definitions:

Sexual Performance

Refers to an individual's ability to perform sexually, which can be influenced by psychological, physical, and emotional factors.

Gender Roles

Socially and culturally defined expectations and behaviors considered appropriate for individuals based on their perceived or assigned gender.

Gender-role Transcendence

The notion that an individual's competencies and preferences should be considered beyond traditional gender expectations and roles.

Division of Labor

The assignment of different parts of a manufacturing process or task to different people in order to improve efficiency.