A Security That Is Fairly Priced Will Have a Return

question 140

Multiple Choice

A security that is fairly priced will have a return that lies _____ the Security Market Line.

• A) Below.
• B) On or below.
• C) On.
• D) On or above.
• E) Above.

---

Definitions:

Investment Projects

Initiatives or activities undertaken by an entity to invest capital with the aim of generating revenue or appreciating in value.

Internal Rate of Return

The discount rate at which the net present value of all cash flows from a particular project equals zero.

Increased Efficiency

Improvements in operational performance that allow for the same or higher levels of output with less input, often through better processes or technology.

Annual Cash Savings

The amount of money saved in a year through various cost-cutting measures or efficiency improvements.