Use the figure for the question(s) below. Consider the following graph of the security market line: Average excess return (%) 12 10 Portfolio "A" 8 Portfolio "B" 6 Portfolio "C" 4 Market Portfolio Portfolio "D" 1 2 Beta Portfolio "B": O A. falls above the SML. O B. is overpriced. c. has a positive alpha. O D. is less risky than the market portfolio.
Use the figure for the question(s) below. Consider the following graph of the security market line: Average excess return (%) 12 10 Portfolio "A" 8 Portfolio "B" 6 Portfolio "C" 4 Market Portfolio Portfolio "D" 1 2 Beta Portfolio "B": O A. falls above the SML. O B. is overpriced. c. has a positive alpha. O D. is less risky than the market portfolio.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Transcribed Image Text:Use the figure for the question(s) below.
Consider the following graph of the security market line:
Average
excess
return (%)
12
10
Portfolio "A"
8
Portfolio "B"
6
Portfolio "C"
4
Market Portfolio
2
Portfolio "D"
2 Beta
Portfolio "B":
O A. falls above the SML.
O B. is overpriced.
OC. has a positive alpha.
O D. is less risky than the market portfolio.
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