If a Security Plots Below the Security Market Line, It

question 94

Multiple Choice

If a security plots below the security market line, it is:

• A)Not rewarding the investor for its unique risk
• B)Underpriced, a situation that should be temporary
• C)Offering too little return to justify its risk
• D)A defensive security, which expects to offer lower returns

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Definitions:

Assertion

An assertion is a confident and forceful statement of fact or belief.

Fraudulent Misrepresentation

A false statement made knowingly or recklessly to induce another party to enter into a contract, resulting in harm or loss.

Reliance

The act of depending on or trusting something or someone.

Legal Assent

The express or implied agreement to the terms of a contract, demonstrating a mutual understanding and intention to be bound by those terms.