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

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Definitions:

Prison System

The organizational structure responsible for the detention, rehabilitation, and management of individuals convicted of crimes, encompassing various institutions and practices.

Ipperwash Crisis

A conflict in Canada between Indigenous people and the Ontario Provincial Police in 1995, centered around land claims and resulting in the death of an Indigenous protester.

Dudley George

Dudley George was an Indigenous activist from the Ojibway nation killed in 1995 during a land claims protest in Ipperwash Provincial Park, Ontario, Canada.

Peaceful Demonstration

A method of protest or political activism that is non-violent and conducted in a way that respects the law.