Use the Figure for the Question(s)below

question 1

Multiple Choice

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

• A)is less risky than the market portfolio.
• B)has a relatively lower expected return than predicted.
• C)is underpriced.
• D)has a negative alpha.

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Definitions:

Proximal Stimulus

Reception of information and its registration by a sense organ (e.g., retinal images in the case of vision). Contrast with distal stimulus.

Percept

The outcome of a perceptual process; the meaningful interpretation of incoming information.

Distal Stimulus

An object, event, or pattern as it exists in the world. Contrast with proximal stimulus.

Prägnanz

A principle from Gestalt psychology that suggests people will perceive and interpret ambiguous or complex images as the simplest form(s) possible.