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"Aramco Corp. (company A) and Bogota Corp. (company B) have the following betas and forecasted returns:...

"Aramco Corp. (company A) and Bogota Corp. (company B) have the following betas and forecasted returns: beta(A)=1.5, beta(B)=2, expected return(A)=13%, expected return(B)=11%. If the T-bill rate is 5% and the market risk premium is 4%, how should you trade?"

Buy A & B

"Sell A, Buy B "

"Buy A, Sell B "

Sell A & B

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Expert Solution

jeff jeffy answered 1 year ago
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