How an investor can take advantage

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Reference no: EM13198072

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.

Reference no: EM13198072

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