A Security That Is Fairly Priced Will Have a Return

question 56

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

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Definitions:

Creditors

Creditors are individuals or entities to whom money is owed by debtors or borrowers.

Primary Objective Test

A rule that states a writing is not needed for enforcement if the promise to pay another party’s debt is made to obtain a gain for the guarantor.

Guarantor

The promisor.

Enforceable

A characteristic of a legal agreement or obligation that allows it to be legally upheld or compelled in a court of law.