Assume that the CAPM holds and expectations of stocks' returns and betas are correctly measured. Which statement is NOT correct? O a. Stock E has more systematic risk than the market portfolio. O b. Stock B is underpriced. O c. Stock D has a negative excess return (a negative alpha). O d. Rational investors should buy Stock C. O e. The price of Stock A will rise, and the excess return of Stock A will fall.

Assume that the CAPM holds and expectations of stocks' returns and betas are correctly measured. Which statement is NOT correct? O a. Stock E has more systematic risk than the market portfolio. O b. Stock B is underpriced. O c. Stock D has a negative excess return (a negative alpha). O d. Rational investors should buy Stock C. O e. The price of Stock A will rise, and the excess return of Stock A will fall.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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