1a) Create a strategy that takes advantage of the mispricing that exists. Create your strategy your strategy so that it goes either long or short $1 invested in the risk-free rate. (Note: the correct strategy only be either long or short the risk-free, it cannot be both or either. You need to solve for the for the strategy and then decide whether the risk-free should be long (investing/lending) or short (borrowing)).

Following on from the above: with a strategy that goes either long or short $1 in a risk free asset, what should the amount invested in the risk-free asset be? (use + for long and - for short)

Group of answer choices

b) Following on from the above: with a strategy that goes either long or short $1 in a risk free asset, what should the the amount invested in Asset A be? (use + for long and - for short)

c) Following on from the above: with a strategy that goes either long or short $1 in a risk free asset, what should the the amount invested in Asset B be? (use + for long and - for short)

Consider the following data for a single-factor economy All portfolios are well diversified. Go short $1 in the risk-free, wF=1 Go long $1 in the risk-free, wF=1