Question: Consider the single factor APT. Portfolio A has a beta of 0.5 and an expected return of 12%. Portfolio B has a beta of 0.85

Consider the single factor APT. Portfolio A has a beta of 0.5 and an expected return of 12%. Portfolio B has a beta of 0.85 and an expected return of 17%. The risk-free rate of return is 3%. Is there an arbitrage opportunity?If so, how would you take advantage of it?

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