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Consider the Single Factor APT

question 55

Multiple Choice

Consider the single factor APT. Portfolio A has a beta of 0.2 and an expected return of 13%. Portfolio B has a beta of 0.4 and an expected return of 15%. The risk-free rate of return is 10%. If you wanted to take advantage of an arbitrage opportunity, you should take a short position in portfolio _________ and a long position in portfolio
_________.

Understand the impact of Federal Reserve's actions on money supply and its consequences on the value of money.

Differentiate between various types of variables in economics (relative, dichotomous, real, nominal).

Calculate the velocity of money given the money supply, money demand, and GDP.

Analyze the effect of central banks' monetary policies on the economy during recession periods.

Definitions:

Real Property

Land and anything permanently attached to it, such as buildings.

Deed Of Trust

A formal written instrument that transfers legal ownership of real property to a third party while the mortgagor remains on the property. The third party holds certain rights to that property as security for the mortgagor’s creditors.

Disinterested Third Party

A disinterested third party is an unbiased individual or entity that is not involved in the matters at hand, ensuring impartiality in decision-making processes or disputes.

One Percent

Often refers to the segment of the population that holds a disproportionately large share of wealth and economic power.