Assuming the CAPM is valid, _____________ securities lie _____________the security market line.
A)undervalued, below
B)overvalued, on
C)undervalued, on
D)overvalued, below

Question

Quizplus · Accepted Answer

According to the CAPM, securities that lie below the security market line are considered overvalued as they are generating less returns compared to their risk. Therefore, the correct choice is D.

Assuming the CAPM Is Valid, _____________ Securities Lie _____________The Security

Assuming the CAPM Is Valid, _ Securities Lie _The Security