Consider the Single Factor APT

question 70

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 _________.

• A)A, A
• B)A, B
• C)B, A
• D)B, B
• E)none of the above

---

Definitions:

Virtual Meeting

A meeting conducted using digital platforms that allows participants to communicate and collaborate from different geographic locations without the need for physical presence.

Ethnocentrism

The belief in the inherent superiority of one's own ethnic group or culture, often at the expense of a broader or more inclusive perspective.

Open Book Management

What occurs when managers provide employees with essential financial information about their companies.

Communication Transparency

The practice of openly and honestly sharing information, ensuring clarity and accessibility to all relevant parties.