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X and Y are well diversified portfolios in an economy where the risk-free rate is 8%. The following details are known about X and Y
X and Y are well diversified portfolios in an economy where the risk-free rate is 8%. The following details are known about X and Y
PortfolioExpected returnBetaX16%1.0Y12%0.25
We can conclude that portfolios X and Y ___________
- Offer an arbitrage opportunity
- Are in equilibrium
- Are both fairly priced
- Are both underpriced
- None of the above
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