You Have Analyzed the Following Four Securities and Have Estimated

question 28

Multiple Choice

You have analyzed the following four securities and have estimated each security's beta and what you expect each security to return next year. The expected return on the market portfolio is 12%, and the relevant risk-free rate is 5%.
-Refer to the information above. Based on your analysis, which of the securities is (are) overpriced?

• A)Security A only
• B)Security B and Security D
• C)Security B and Security C
• D)Security D only

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Definitions:

ICD-9-CM

The International Classification of Diseases, Ninth Revision, Clinical Modification, a system used in the United States for coding and classifying morbidity data until replaced by ICD-10-CM.

ICD-10-CM

International Classification of Diseases, Tenth Revision, Clinical Modification; a system used by physicians and healthcare providers to code and classify all diagnoses, symptoms, and procedures recorded in conjunction with hospital care in the U.S.

Numeric Or Alpha

Refers to data that can be represented as numbers (numeric) or letters (alpha).

ICD-9-CM

International Classification of Diseases, Ninth Revision, Clinical Modification, a system used in the United States until 2015 to code and classify morbidity data from inpatient and outpatient records, including physician offices.