Question

In the single-factor Arbitrage Pricing Theory (APT), Portfolio A has a beta of 1.4 and an expected return of 20%. Portfolio B has a beta of 0.8 and an expected return of 16%. The risk-free rate (R_f) is a key component for APT calculations, but it is not provided in the information given. To complete the analysis and calculate the expected return on the market portfolio, we would need to know the risk-free rate.

Answer 1

To calculate the expected return on the market portfolio in the single-factor APT, we need the risk-free rate.

Step-by-step explanation:

In the single-factor Arbitrage Pricing Theory (APT), the risk-free rate is a key component for calculations but is not provided in the information given. To calculate the expected return on the market portfolio, we would need to know the risk-free rate.