Use the Figure for the Question(s)below

question 24

Multiple Choice

Use the figure for the question(s) below.Consider the following graph of the security market line:
-Which of the following statements regarding portfolio "C" is/are correct? 1.Portfolio "C" has a negative alpha.
2.Portfolio "C" is overpriced.
3.Portfolio "C" is less risky than the market portfolio.
4.Portfolio "C" should not exist if the market portfolio is efficient.

• A)1 and 3
• B)2 and 4
• C)1,3,and 4
• D)3 only

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Definitions:

Undue Influence

The use of excessive pressure by the dominant member of a confidential relationship to convince the weaker party to enter a contract that greatly benefits the dominant party.

Durable Power of Attorney

A legal document that grants a trusted person the authority to act on behalf of another person in legal or financial matters, continuing or taking effect in the event of incapacity.

Incapacitating Illness

A severe health condition that significantly impairs a person's ability to perform ordinary daily activities.

Legal Rights of Inheritance

The statutory or customary rights governing the transfer of property or titles upon the death of the owner to the legal heirs.