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:

Flake Tools

Prehistoric stone tools created by chipping or flaking off pieces from a larger stone, used by early humans for cutting and scraping.

Homo Erectus

An extinct species of early human that lived throughout Africa, Asia, and Europe between approximately 1.9 million and 143,000 years ago, known for its upright posture.

Toolmakers

Beings (often humans) who create, modify, or use tools, enhancing their ability to interact with and manipulate their environment.