Assume that both X and Y are welldiversified portfolios and the riskfree rate is 8%. In this
Question:
In this situation you would conclude that portfolios X and Y:
a. Are in equilibrium.
b. Offer an arbitrage opportunity.
c. Are both underpriced?
d. Are both fairlypriced?
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Portfolio Expected Return 1696 12 Beta 1.00 0.25
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