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1. Assume that both A and B are well-diversified portfolios and the risk-free rate is 8%. Portfolio Expected Return 18% 1290 Beta 1.0 0.25 In

1. Assume that both A and B are well-diversified portfolios and the risk-free rate is 8%. Portfolio Expected Return 18% 1290 Beta 1.0 0.25 In this situation you would conclude that portfolios A and B: a. Are in equilibrium. b. Offer an arbitrage opportunity. c. Are both underpriced. d. Are both fairly priced

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