In each of the following cases, determine whether or not there is an arbitrage oppor- tunity and, where possible, describe the steps you would take in order to construct an arbitrage portfolio. Compute the profit from your strategy. Assume that borrowing at the risk-free rate is possible, and that either risky asset can be sold short. (a) Two well-diversified portfolios P and Q have expected returns E(Tp) = 13% and E(ro) = 10% respectively. Their respective betas are Bp = 1 and BQ=0.5. The risk-free rate is 5%. (b) You are given three well-diversified portfolios: Portfolio E(rBeta 12% 1.2 6% 0.0 8% 0.6 (c) Suppose that the risk-free rate of interest is 5%. X and Y are well-diversified exchange-traded funds with returns that satisfy rx = 0.10+ 0.5F ry = 0.14 + F The current prices of both X and Y are $20 a share. In each of the following cases, determine whether or not there is an arbitrage oppor- tunity and, where possible, describe the steps you would take in order to construct an arbitrage portfolio. Compute the profit from your strategy. Assume that borrowing at the risk-free rate is possible, and that either risky asset can be sold short. (a) Two well-diversified portfolios P and Q have expected returns E(Tp) = 13% and E(ro) = 10% respectively. Their respective betas are Bp = 1 and BQ=0.5. The risk-free rate is 5%. (b) You are given three well-diversified portfolios: Portfolio E(rBeta 12% 1.2 6% 0.0 8% 0.6 (c) Suppose that the risk-free rate of interest is 5%. X and Y are well-diversified exchange-traded funds with returns that satisfy rx = 0.10+ 0.5F ry = 0.14 + F The current prices of both X and Y are $20 a share