Use the Figure for the Question(s)below

question 47

Multiple Choice

Use the figure for the question(s) below.Consider the following graph of the security market line:
-Portfolio "D":

• A)falls below the SML.
• B)has a negative alpha.
• C)is overpriced.
• D)offers an expected return equal to the risk-free rate.

---

Definitions:

Asset Return

A measure of the earnings generated by an asset over a particular period, often expressed as a percentage of the asset's initial cost.

Government Announcement

Government announcements are official statements or publications made by a government that can impact markets, policy, and public perception.

Risk-Free Rate

The return on investment with no risk of financial loss, often represented by the yield on government bonds.

Market Risk Premium

The additional return investors expect for holding a risky market portfolio instead of risk-free assets.