What Would You Recommend to an Investor Who Is Considering

question 82

Multiple Choice

What would you recommend to an investor who is considering an investment that,according to its beta,plots below the security market line (SML) ?

• A) Invest; return is high relative to risk.
• B) Don't invest; risk is high relative to return.
• C) Invest; stocks revert to the SML over time.
• D) Don't invest; stocks below the SML have too much unique risk.

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Definitions:

Output

The amount of product or work produced by a company, employee, or process within a specific period.

Performance

The level of output or efficiency at which tasks and activities are accomplished, often measured against predetermined standards or objectives.

Pay for Knowledge Systems

are compensation strategies that reward employees for their skills, knowledge, and competencies rather than their job title or position.

Task Flexibility

The degree to which a job allows for variation in the work activities and processes performed by an employee.