Where Will a Security Plot in Relation to the Security

question 55

Multiple Choice

Where will a security plot in relation to the security market line (SML) if it has a beta of 1.1 and is overvalued?

• A)to the right of the overall market and above the SML
• B)to the right of the overall market and below the SML
• C)to the left of the overall market and above the SML
• D)to the left of the overall market and below the SML
• E)on the SML

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Definitions:

Variance

A statistical measure that represents the dispersion or spread of a set of data points within a dataset.

Standard Deviation

A measure that is used to quantify the amount of variation or dispersion of a set of data values from the mean.

Distribution

The way in which something is shared out among a group or spread over an area, or the arrangement of values of a variable showing their observed or theoretical frequency of occurrence.

Variance

A statistical measure of dispersion that shows how much values in a data set differ from the mean.