Question: why is the answer A? 63. Assume that both X and Y are well-diversified portfolios and the risk-free rate is 8%. Portfolio X has an

why is the answer A?

63. Assume that both X and Y are well-diversified portfolios and the risk-free rate is 8%. Portfolio X has an expected return of 14% and a beta of 1. Portfolio Y has an expected return of 9.5% and a beta of .25. In this situation, you would conclude that portfolios X and Y _________. A. are in equilibrium B. offer an arbitrage opportunity C. are both underpriced D. are both fairly priced

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