Question: (b) Consider a general one-factor model with exposure to some general risk factor F. Now consider the graphic below, which identifies a number of well-diversified

(b) Consider a general one-factor model with exposure to some general

(b) Consider a general one-factor model with exposure to some general risk factor F. Now consider the graphic below, which identifies a number of well-diversified portfolios, including the risk-free asset. Explain how this represents an arbitrage opportunity and how it could be exploited. Expected. Return (%) 10 Risk Promlum In (with respect to macro factor) gurean arbitrag erportunity

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