Question 5 Suppose rf=6.75% and a well-diversified portfolio P has a beta of 1.4 and an alpha pf 1% when regressed against a systematic factor S. Another well diversified portfolio Q has a beta of 1 and alpha of 1.65% A. Using the other information, explain if there is any arbitrage opportunity B. If there is an arbitrage opportunity, what action would you take to capitalise on this opportunity? Question 5 Suppose rf=6.75% and a well-diversified portfolio P has a beta of 1.4 and an alpha pf 1% when regressed against a systematic factor S. Another well diversified portfolio Q has a beta of 1 and alpha of 1.65% A. Using the other information, explain if there is any arbitrage opportunity B. If there is an arbitrage opportunity, what action would you take to capitalise on this opportunity