Portfolio a Has a Beta of 0

question 36

Multiple Choice

Portfolio A has a beta of 0.2 and an expected return of 14%.Portfolio B has a beta of 0.5 and an expected return of 16%.The risk-free rate of return is 10%.If you manage a long/short equity fund and 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

---

Definitions:

Restorative Justice

A system of criminal justice that focuses on the rehabilitation of offenders through reconciliation with victims and the community at large.

Interactional Justice

The perception of fairness in personal interactions and treatments individuals receive from authority figures, especially in the context of feedback or dispute resolution.

Early Retirements

A situation where an employee chooses to retire before the customary retirement age, often incentivized by employer offerings.

Involuntary Terminations

The act of ending an employee's contract or employment against their will, often due to layoffs or disciplinary actions.