Question: Q#4: [10 POINTS] APT: Assume that both A and Bare well-diversified portfolios and the risk-free rate is 8%. Portfolio Expected Return Beta A 18% 1

Q#4: [10 POINTS] APT: Assume that both A and Bare well-diversified portfolios and the risk-free rate is 8%. Portfolio Expected Return Beta A 18% 1 .0 B 12% 0.25 In this situation you would conclude that portfolios A and 5: Are in equilibrium. Offer an arbitrage opportunity. Are both underpriced. Are both fairly priced. P-PP'P

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