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please do part abc B1. Consider the following 4 well diversified portfolios of stocks, W, X, Y, and Z. Below is a depiction of the

image text in transcribedplease do part abc

B1. Consider the following 4 well diversified portfolios of stocks, W, X, Y, and Z. Below is a depiction of the Security Market Line for this economy. E[f], Z SML 11% X 7% Y 6% 3% 0 1.25 1.5 1.75 B Bla. How many factors are in the economy depicted in the graph above? Just write the number, no explanation is needed. There is no partial credit. [1 mark] Blb. In an economy where the CAPM holds, can the situation in the graph above exit, even if it exists only temporarily? Yes or No [1 mark] and Why? [1 mark] Blc. In an economy where APT holds, can the situation in the graph above exit, even if it exists only temporarily? Yes or No [1 mark] and Why? [1 mark] Bld. There is an arbitrage opportunity in this economy. Create a portfolio that requires $0 net investment and goes long or short $100 in the underpriced asset. Exclude the over-priced asset from your zero-net-investment portfolio. What weights do you put in each asset used in the portfolio? [7 marks]

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