An Analyst Develops Her APT Asset Pricing Line and Finds

question 32

Multiple Choice

An analyst develops her APT asset pricing line and finds that Securities A and B both have the same factor sensitivity. A lies above the line; B lies below the line. She should

• A) buy B and sell an equal amount of A.
• B) sell B and hold A.
• C) buy A and sell an equal amount of B.
• D) buy A and hold B.

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