Use the Figure for the Question(s)below

question 24

Multiple Choice

Use the figure for the question(s) below.Consider the following graph of the security market line:
-Which of the following statements regarding portfolio "C" is/are correct? 1.Portfolio "C" has a negative alpha.
2.Portfolio "C" is overpriced.
3.Portfolio "C" is less risky than the market portfolio.
4.Portfolio "C" should not exist if the market portfolio is efficient.

• A)1 and 3
• B)2 and 4
• C)1,3,and 4
• D)3 only

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Definitions:

Restraint of Trade

Legal phrase relating to practices or agreements that restrict competition or limit market entry.

Clayton Act

U.S. antitrust law aimed at increasing competition and preventing monopolies by prohibiting certain actions that lead to anti-competitiveness.

Price Discrimination

The practice of selling the same product or service at different prices to different customers, not due to differences in cost.

Competitors

Entities or individuals engaged in a commercial contest or rivalry, vying for the same market share or customer base.