Security a has a beta of 10 and an expected return of 12


Security A has a beta of 1.0 and an expected return of 12%. Security B has a beta of 0.75 and an expected return of 11%. The risk-free rate is 6%. Explain the arbitrage opportunity that exists and how an investor can take advantage of it. Give specific details about how to form the portfolio, what to buy and what to sell.

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Finance Basics: Security a has a beta of 10 and an expected return of 12
Reference No:- TGS01100515

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