Question: If the simple CAPM is valid, is the following situation possible? Portfolio 1 Expected Return Standard Deviation A 18% 22% B 15% 25% Risk-free 3%

If the simple CAPM is valid, is the following situation possible?

If the simple CAPM is valid, is the following situation possible? Portfolio 1 Expected Return Standard Deviation A 18% 22% B 15% 25% Risk-free 3% 0 Portfolio 2 Expected Return 20% 16% Beta 1.2 A B 1.4 A. Both Portfolio 1 and Portfolio 2 are possible. B. Portfolio 1 is possible, while portfolio 2 is not possible. C. Neither Portfolio 1 nor Portfolio 2 is possible. D. Portfolio 2 is possible, while portfolio 1 is not possible

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