Security a has a beta of 10 and an expected return of 12, Ask an Expert

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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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Financial Management, Finance

Category:- Financial Management
Reference No.:- M9750483

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