Assume That Both X and Y Are Well-Diversified Portfolios and the Risk-Free

question 29

Multiple Choice

Assume that both X and Y are well-diversified portfolios and the risk-free rate is 8%.Portfolio X has an expected return of 14% and a beta of 1.00.Portfolio Y has an expected return of 9.5% and a beta of 0.25.In this situation,you would conclude that portfolios X and Y _________.

• A) are in equilibrium
• B) offer an arbitrage opportunity
• C) are both underpriced
• D) are both fairly priced

---

Definitions:

Social Responsibility

An ethical framework suggesting that an entity, be it an organization or individual, has an obligation to act for the benefit of society at large.

Defensive Strategy

Tactics employed by a company to protect its market share, products, or services from competitors or potential threats.

Defensive Strategy

A business approach aimed at protecting the company's current market position and assets from potential threats or competition.

Corporate Social Responsibility

A business model that helps a company be socially accountable—to itself, its stakeholders, and the public—by practicing ethical and sustainable actions.