Question
Aramco Corp. (company A) and Bogota Corp. (company B) have the following betas and forecasted returns: beta(A)=1.5, beta(B)=2, expected return(A)=10%, expected return(B)=11%. If the T-bill
Aramco Corp. (company A) and Bogota Corp. (company B) have the following betas and forecasted returns: beta(A)=1.5, beta(B)=2, expected return(A)=10%, expected return(B)=11%. If the T-bill rate is 5% and the market risk premium is 4%, how should you trade?"
Buy A & B
"Sell A, Buy B "
"Buy A, Sell B "
Sell A & B
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Business Forecasting
Authors: John E. Hanke, Dean Wichern
9th edition
132301202, 978-0132301206
