Use the Figure for the Question(s)below

question 71

Multiple Choice

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

• A)is less risky than the market portfolio.
• B)is overpriced.
• C)has a positive alpha.
• D)falls above the SML.

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Definitions:

Price Increase

A rise in the cost of goods or services, affecting demand, supply, and inflation.

Optimal Consumption

The mix of goods and services that maximizes a consumer's utility given their budget constraints.

Initial Endowment

The initial quantity of goods, services, or resources an individual, institution, or country possesses at the start of an economic analysis.

Relative Prices

The price of one good or service compared to another, indicating their exchange rate in the market.