A Stock with an Actual Return That Lies Above the Security

question 14

Multiple Choice

A stock with an actual return that lies above the security market line:

• A) has more systematic risk than the overall market.
• B) has more risk than warranted based on the realized rate of return.
• C) has yielded a higher return than expected for the level of risk assumed.
• D) has less systematic risk than the overall market.
• E) has yielded a return equivalent to the level of risk assumed.