Question: explain the answer and show calculations Consider the single factor APT. Portfolio A has a beta of 1.3 and an expected return of 21%. Portfolio

explain the answer and show calculations

explain the answer and show calculations Consider the single factor APT. Portfolio

Consider the single factor APT. Portfolio A has a beta of 1.3 and an expected return of 21%. Portfolio B has a beta of 0.7 and an expected return of 17%. The risk-free rate of return is 8%. If you wanted to take advantage of an arbitrage opportunity, you should take a short position in portfolio and a long position in portfolio

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