A Stock with an Actual Return That Lies Above the Security

question 14

Multiple Choice

A stock with an actual return that lies above the security market line:

• A) has more systematic risk than the overall market.
• B) has more risk than warranted based on the realized rate of return.
• C) has yielded a higher return than expected for the level of risk assumed.
• D) has less systematic risk than the overall market.
• E) has yielded a return equivalent to the level of risk assumed.

---

Definitions:

Genetically Identical

Having exactly the same DNA sequence in every genetic locus, as seen in identical twins or clones.

Placenta

An organ that develops in the uterus during pregnancy, providing oxygen and nutrients to the growing fetus while removing waste products.

Nourishment

The provision of necessary materials, especially food, required by organisms and cells to stay alive, grow, and reproduce.

Waste Products

Substances that are produced as byproducts of biological, industrial, or other processes and are not of further use within that process.