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Q#4 Assume that the following two-index model describes returns: Assume that the following three portfolios are observed. PortfolioExpected Returnbilbi2 12.0 13.4 12.0 1 0.5 3

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Q#4 Assume that the following two-index model describes returns: Assume that the following three portfolios are observed. PortfolioExpected Returnbilbi2 12.0 13.4 12.0 1 0.5 3 0.2 3 -0.5 a. Find the equation that must describeeuibrium returns. b.Illustrate the arbitrage opportunities that would exist if a portfolio called D with the following properties were observed: bpz-2

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