Suppose there are two securities A B Security A has a beta of 1 0 and an expected return of 12 while Security B has a beta of 0 75 and an expected return of 11 If the risk free rate is 6 , find if arbitrage opportunity exists and explain how an investor can take advantage of it Your strategy should include details about which asset you should buy and sell to form a portfolio Suppose there are two securities A B Security A has a beta of 1 0 and an expected return of 12 while Security B has a beta of 0 75 and an expected return of 11 If the risk free rate is 6 , find if arbitrage opportunity exists and explain how an investor can take advantage of it Your strategy should include details about which asset you should buy and sell to form a portfolio

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Question: Suppose there are two securities A & B. Security A has a beta of 1.0 and an expected return of 12% while Security B has

Suppose there are two securities A & B. Security A has a beta of 1.0 and an expected return of 12% while Security B has a beta of 0.75 and an expected return of 11%. If the risk-free rate is 6%, find if arbitrage opportunity exists and explain how an investor can take advantage of it. Your strategy should include details about which asset you should buy and sell to form a portfolio.

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