Refer to the Graph

question 124

Multiple Choice

Refer to the graph. If a financial asset's average expected rate of return and beta put it at point F,

• A) arbitrage will push down the price of the asset and lower the average expected rate of return to Y.
• B) arbitrage will push up the price of the asset and lower the average expected rate of return to Y.
• C) a restrictive monetary policy is needed to move the asset onto the Security Market Line.
• D) an expansionary monetary policy is needed to move the asset onto the Security Market Line.

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Definitions:

Executory Contract

A contract under which both parties to the agreement have outstanding obligations or performance yet to be completed.

Novated

The process of replacing an original contract with a new one, transferring rights and obligations to another party.

Section 29

Without additional context, this is too vague, but it could refer to a specific section of a law or regulation depending on the context.

Ambiguous

Lacking clear definition or boundaries, open to more than one interpretation or understanding.