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

answer; ///i believe the correct answer is (c) laissez-faire;

the answer is "b.the increased supply will create a surplus. "

the essential thought behind price controls is straightforward - utilize the power of law to modify the equilibrium of a market. for instance, the legislature may choose that the steel business needs to survive, and in this way pass a law to set a value floor on steel. this implies all steel sold must offer at or over the floor value, which must be set over the equilibrium cost for it to have any impact. the switch could likewise happen - the administration can choose that steel is excessively costly and set a value roof underneath its equilibrium value, with the goal that all steel must be sold at or beneath that ceiling.

the answer would be price fixing, hope it