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:

Capital Lease

A lease agreement considered to have the economic characteristics of asset ownership, thus it is recorded as an asset and liability on the balance sheet.

Fair Market Value

An estimate of the market price of a property or asset if sold under competitive and open market conditions.

Marketable Securities

Financial instruments that can be easily converted into cash at market value, often used for short-term investments.

Current Liabilities

Obligations or debts a company is expected to pay off within a year.