Question: Assume the APT model has one risk factor (B). Portfolio A is in equilibrium, it has a Ba= 1.1 and an E(RA) = 10%. Portfolio

Assume the APT model has one risk factor (B). Portfolio A

Assume the APT model has one risk factor (B). Portfolio A is in equilibrium, it has a Ba= 1.1 and an E(RA) = 10%. Portfolio B is not in equilibrium, it has a BB= 1.1 and an E(RB) = 12%. Portfolio B is and one should short and go long in A. overvalued; Portfolio B; Portfolio A O B. undervalued; Portfolio A; Portfolio B C. none of the answers listed here O D. undervalued; Portfolio B; Portfolio A

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