Consider the Single Factor APT

question 16

Multiple Choice

Consider the single factor APT. Portfolio A has a beta of 0.5 and an expected return of 12%. Portfolio B has a beta of 0.4 and an expected return of 13%. The risk-free rate of return is 5%. If you wanted to take advantage of an arbitrage opportunity, you should take a short position in portfolio _________ and a long position in portfolio

• A) A; A
• B) A; B
• C) B; A
• D) B; B

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Definitions:

Aggressive Mechanism

A psychological strategy employed to deal with stress or threat, often characterized by assertive or confrontational behavior.

Displacement

The redirection of an impulse from a socially unacceptable target to a more acceptable or less threatening one.

Source Of Conflict

Source of Conflict represents the underlying reasons or factors that lead to disagreements, disputes, or clashes among individuals or groups in any setting.

Withdrawal Mechanism

Behaviors or actions taken by individuals to distance themselves from stress-inducing situations or contexts, often involving leaving or disengaging from the situation.