Based on the capital asset pricing model,a security that:
A)has a beta of 1.2 will plot as a point to the left of the overall market point
B)is over-priced will plot as a point below the security market line
C)has a beta of 1.0 should produce the risk-free rate of return
D)has a beta of 0.9 will plot as a point below the security market line
E)is under-priced will plot as a point to the left of the overall market point

Question

Quizplus · Accepted Answer

A security that is over-priced will plot below the security market line because its expected return is less than what is predicted by the CAPM for its level of risk.

Based on the Capital Asset Pricing Model,a Security That