A Stock with an Actual Return That Lies Above the Security

question 46

Multiple Choice

A stock with an actual return that lies above the security market line has:

• A) more systematic risk than the overall market.
• B) more risk than that warranted by CAPM.
• C) a higher return than expected for the level of risk assumed.
• D) less systematic risk than the overall market.
• E) a return equivalent to the level of risk assumed.

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Definitions:

Cessations

The act of stopping or discontinuing an action or behavior.

Narcolepsy

A sleep disorder characterized by uncontrollable sleep attacks. The sufferer may lapse directly into REM sleep, often at inopportune times.

Sleepiness

The state or condition of feeling the need for sleep, often accompanied by lethargy and decreased alertness.

Seizures

Sudden, uncontrolled electrical disturbances in the brain that can cause changes in behavior, movements, feelings, and levels of consciousness.