2. Assume that both X and Y are well-diversified portfolios and the risk-free rate is 8%. Portfolio Expected Return Beta X 16% 1.00 Y 12 0.25 CHAPTER 10 Arbitrage Pricing Theory and Multifactor Models of Risk and Return 331 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

Gif the federal reserve did not regulate fiscal policy, monitor banks and provide services for banks, what would most likely be the economic conditions to transact business in the u. s.? the economy would primarily be based on a barter system rather than a fiat system. there would be no discrimination in lending by local banks. the economy would be less efficient and transactions most likely more costly.