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    expected return on these portfolios

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    Assume that both X and Y are well-diversified portfolios and the risk free rate is 8%. Portfolio X has an expected return of 14% and a beta 1. Portfolio Y has an expected return of 9,5% and beta 0,25. In this situation, you would conclude that portfolios X and Y________________

    a. Are in equilibrium
    b. Offer an arbitrage opportunity
    c. Are both underpriced
    d. Are both fairly priced
    e. Are both overpriced

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    https://brainmass.com/economics/finance/expected-return-portfolios-354652

    Solution Preview

    Since both portfolios are well diversified, the expected return on these portfolios should follow the CAPM.
    Rp=Rf+Beta*(Rm-Rf)
    Rf=8%
    For ...

    Solution Summary

    Expected return on these portfolios is assessed clearly in the solution.

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