Answer: A;B
Explanation:
<em>Consider the single factor APT. Portfolio A has a beta of 1.7 and an expected return of 19%. Portfolio B has a beta of .6 and an expected return of 15%. The risk-free rate of return is 11%. If you wanted to take advantage of an arbitrage opportunity, you should take a short position in portfolio </em><em><u>A</u></em><em> and a long position in portfolio </em><em><u>B.</u></em>
You should take a short position in the Portfolio with a lower risk premium and a long position on the Portfolio with a higher risk premium.
Using the single factor APT, the formula for risk premium can be derived from;
E(r) = Rf + beta (Risk premium on factor)
<u>Portfolio A</u>
19% = 11% + 1.7 * Risk premium
1.7 * risk premium = 8%
Risk Premium = 4.7%
<u>Portfolio B</u>
15% = 11% + 0.6 * RP
0.6 * RP = 4%
RP = 6.67%
Portfolio A Risk premium is lower so it should be <u>shorted.</u>
Portfolio B Risk premium is higher so it should taken a <u>long position</u> in.
Answer:
Principal
Explanation:
A loan can be defined as the lending of money, property, etc by one party to another party. A loan is more often than not given out by financial institutions.
The money is loaned between parties, the original amount borrowed by the receiving party is called the PRINCIPAL.
This principal begins to reduce as soon as the money starts to be paid back.
Every principal(loan) has an interest. The interest is always at a particular rate, spread over a period of time, etc.
Cheers.
The correct answer is cargo ships, just took the test.
Treasury bill
<span>It's a short-term debt backed by the U.S.
government with a limit of one year, It's sold in denominations
of $1,000. The maximum purchase is $5 million </span>