Security a Has a Beta of 1

question 95

Essay

Security A has a beta of 1.0 and an expected return of 12%.Security B has a beta of 0.75 and an expected return of 11%.The risk-free rate is 6%.Explain the arbitrage opportunity that exists;explain how an investor can take advantage of it.Give specific details about how to form the portfolio,what to buy and what to sell.B.The investor can accomplish this by choosing .75 as the weight in A and .25 in the risk-free asset.This portfolio would have E(r_p)= 0.75(12%)+ 0.25(6%)= 10.5%,which is less than B's 11% expected return.The investor should buy B and finance the purchase by short selling A and borrowing at the risk-free asset.

Understand the importance of data warehousing and data mining in marketing research.

Learn the benefits and limitations of different types of market research techniques, such as neuromarketing and sentiment analysis.

Understand the concept and signs of cachexia.

Recognize children’s and adults' comprehension and attitudes towards their own death.

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Definitions:

British Strategy

The methods and plans used by the United Kingdom in pursuit of military, political, or economic objectives, often reflecting the country's global interests, historical context, and geopolitical challenges.

New England

New England is a region located in the northeastern part of the United States, comprising six states: Maine, Vermont, New Hampshire, Massachusetts, Rhode Island, and Connecticut.

Potomac

A river in the Eastern United States, flowing into the Chesapeake Bay, and passing through Washington D.C.

Patriot Cause

The movement and ideological drive toward independence from British rule among the American colonies, particularly during the late 18th century.