Consider the Single Factor APT

question 22

Multiple Choice

Consider the single factor APT.Portfolio A has a beta of 1.3 and an expected return of 21%.Portfolio B has a beta of 0.7 and an expected return of 17%.The risk-free rate of return is 8%.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:

Intrasender Role Conflict

A situation where an individual receives conflicting expectations or demands from the same source.

Allocation Of Rewards

The distribution of benefits or compensations among individuals or groups based on criteria such as performance, need, or status.

Equity

Fair treatment and fairness in opportunity, distribution of resources, and recognition within an organization or society.

Social Responsibility

The obligation of individuals, groups, or organizations to act for the benefit of society at large, considering the impact of their activities.